School projects here will have a lower interest rate due to the corporation’s improving credit ratings.
The Plainfield Community School Corporation went from an “A” credit rating to and “AA+,” giving the district better interest rates.
Jud Wolfe is the assistant superintendent of finance and buildings and grounds for PCSC. He explained how a credit rating is developed for a school district.
Not all school districts have a credit rating, he said, because not all have debt. The credit rating is determined through the Indiana State Aid Intercept Program.
“All public school corporations are part of the Indiana State Aid Intercept Program,” Wolfe said. “If, for some reason, a school corporation couldn’t pay a loan back, the program would take their tuition support payments and give it to the bond holders.”
He explained that tuition support payments are the funds school districts receive from the state for their normal operating costs.
“What the program is doing is making sure that a school corporation has twice the debt service available,” he said. “For example, if a corporation has a $5 million debt service, they want to make sure they have $10 million, or twice the coverage.”
He said this is how Plainfield’s rating has gotten better.
“You see, not all school’s have twice the coverage,” he said.
Wolfe said the Plainfield Community School Corporation Board of School Trustees has set a high standard when it comes to being fiscally responsible.
“We try to do a good job in managing the taxpayers’ dollars,” he said. “The school board establishes and maintains the culture and we try to be fiscally prudent in all of our decisions.”
Those decisions, he said, have now paid off. With the higher rating comes lower interest on bonds the corporation sells to fund projects.
“It reduces the cost of your interest rates,” Wolfe said.
That helps the corporation keep projects as inexpensive as possible and save taxpayer dollars, he added.