State Qualified Bond Program
Like a number of other states, Massachusetts has a state aid intercept program whose goal is to provide more efficient market access for distressed cities, towns and regional school districts that need to borrow by issuing general obligation bonds.
Chapter 44A establishes the State Qualified Bond Act. This law permits cities, towns and regional school districts to issue general obligation bonds payable from state appropriations for Local Aid. The State Treasurer’s Office administers the State Qualified Bond Program, serving as paying agent. The Division of Local Services within the Department of Revenue, working with the State Treasurer’s Office, ensures Local Aid distributions are intercepted to fund the repayment of interest and principal on the outstanding bonds. Each city, town or regional school district must receive authorization to issue State Qualified Bonds by the Municipal Finance Oversight Board which is chaired by the State Auditor.
Given the strength of the program, bonds issued pursuant to it have received high credit ratings. The current ratings are ‘Aa2’ from Moody’s and ‘AA’ from Standard & Poor’s – one rating notch off of the Commonwealth’s own general obligation bond rating.
- For a link to the relevant statute, please click HERE
- For a summary of the program, please click HERE