PIERRE, S.D. (KELO-AM) – Gov. Dennis Daugaard announced today that the state has formally escrowed $42.8 million of state bonds from its balance sheet, and prepaid another $5 million of bonds and $8.4 million of interest.
The Governor proposed paying off outstanding bonds in December as a part of his Budget Address. That proposal used one-time receipts, totaling $56.2 million, to pay down bonds funded by state general funds. The move freed up $6.3 million in ongoing state funds, which were used by the Governor and the Legislature to increase funding for education, health providers and higher education.
The state Legislature overwhelmingly passed HB 1206 during the 2014 Legislative Session which implemented the plan.
The defeasance and prepayment of the four outstanding bond issues represent nearly 16 percent of all outstanding bonds of the South Dakota Building Authority. As of Sept. 1, 2014, there will be no outstanding general obligation bonds of the Authority secured by state general funds.
In April of this year, the Authority’s Board unanimously approved a resolution to facilitate the creation of a contract with First National Bank of Sioux Falls to act as the escrow agent to formally defease the $42.8 million in bonds. The Authority also will retain $6.7 million to prepay principal and interest on a fourth outstanding issue until its call date.