John Marshall Project Wouldn’t Be Affected by Change in SBA Rating
MOUNDSVILLE – Local school officials are waiting to hear more on how declining gambling revenue in the state might affect the funding of future school construction projects from the West Virginia School Building Authority.
Standard & Poor’s Rating Service predicted last week there is a one-in-three chance it could lower the SBA’s excess lottery revenue bonds’ rating from AAA, the highest possible rating, within two years because of declines in gambling revenue.
Marshall County Schools Superintendent Michael Hince said the rating should not affect the district’s renovation of John Marshall High School, which is partially funded by $7 million in SBA grants.
“The SBA for John Marshall High School has been approved already and any bond rating changes, if lowered, should not affect the commitment from the SBA,” Hince said. “As for the future, I cannot really predict the market or if the rate will even change.”
Hince also said decreased funding might affect future availability of funds and competition for funds of prospective projects.
Marshall County is no stranger to SBA funding, as the recently completed Cameron High and Middle School project received $23.3 million from the authority. That is in addition to the $8 million contribution from the SBA toward Hilltop Elementary School, which opened to students in 2010.
In Ohio County, Superintendent Dianna Vargo and Assistant Superintendent Bernie Dolan will be attending a meeting with the SBA today in Charleston, where she said she may learn more about the SBA bond rating
Vargo said Ohio County Schools recently submitted two projects to the SBA, including a major improvement project for Wheeling Park High School for the school’s electrical panels and generator as well as a Ritchie Elementary School project to renovate the school’s HVAC system.
“It is our hope our projects will continue to be funded,” Vargo said. “The SBA has been very supportive of Ohio County Schools. We may learn more about funding Monday.”
The district received a $5 million matching grant from the SBA for completion of the J.B. Chambers Performing Arts Center, which opened in March 2012.
The SBA uses about $19 million from the West Virginia Lottery’s Excess Lottery Fund annually to make payments on the bonds. It has about $260 million outstanding in bonds issued to fund school improvements and construction. Gambling revenue from the state’s four racetrack casinos has been hurt by competition from casinos in Ohio, Pennsylvania and Maryland. Much of the Excess Lottery Fund’s revenue, which helps pay off bonds at several state agencies, is generated by racetrack video lottery.
Analysts said the excess lottery revenue stream provides about 4.7 times the maximum annual debt service required to fund the authority’s bonds. To maintain a top AAA rating, analysts prefer that ration remain at or above four times the debt service.
The state projects that it will have 4.1 times the amount of revenue to cover the debt service payments in its 2014 and 2015 fiscal years. But analysts said the state could fall below the preferred level if revenue comes in worse than expected.