Cross Fiscal Year TRAN Q&A
Q: When will the proceeds from the 2010-2011 cross fiscal year TRAN be available for cash flow use?
A: We currently expect to issue the 2010-2011 cross fiscal year TRAN in February 2011. TRAN proceeds would be available for general fund cash flow use from the last week in February through August 2011.
Q: When will the application process start for the 2010-2011 cross fiscal year TRAN?
A: Districts interested in a cross fiscal year TRAN should contact CSBA or Piper Jaffray to request a board adoption package by November 2010.
Q: Will the district need to create a cash flow projection for this TRAN issuance?
A: Yes. Issuers will need to provide their 2010-11 first interim cash flow report and/or any additional cash flow projections as part of the TRAN application process.
Q: Can a cross fiscal year TRAN be issued as a tax-exempt note?
A: Yes. The timing of a TRAN sale does not impact its ability to be issued as tax exempt. We expect that participants’ cross fiscal year TRANs will be sized according to IRS regulations that will enable the TRANs to be sold as tax exempt notes. Issuers who would like to be free of the IRS regulations regarding TRAN issuance may always choose to issue all or a portion of their TRAN issuance as taxable notes.
Q: If the district already issued a TRAN for the 2010-2011 fiscal year can the district issue a cross fiscal year TRAN as well?
A: Yes, if the district issued its previous TRAN through the Cash Reserve Program the district can also issue a cross fiscal year TRAN. If the district issued a 2010-2011 TRAN outside the Cash Reserve Program, it is likely that the district could issue a cross fiscal year TRAN through the Cash Reserve Program; however, the bond counsel for the Cash Reserve Program would need to review the documents from the prior issuance to determine if the district could participate.
Q: Can the cross fiscal year TRAN also provide for cash flow needs for the 2011-2012 fiscal year?
A: No. Per state law, only revenues from the fiscal year in which a TRAN is issued can be pledged for its repayment. Since, 2011-2012 revenues cannot be pledged towards the repayment of a cross fiscal year TRAN issued in the 2010-2011 fiscal year, only the deferred 2010-2011 state apportionment payments will secure this cross fiscal year TRAN. After the 2010-2011 deferred apportionment payments are received, these funds must be set aside to repay the cross-fiscal year TRAN.
Q: Can a district who filed a qualified or negative interim report in 2009/10 or 2010/11 issue a cross fiscal year TRAN?
A: Yes, pursuant to Education Code 42133 a district that has filed a qualified or negative interim report in the current or preceding fiscal year may issue a TRAN with the approval of the district’s county office of education. Districts with negative certifications would be issued separately from those with positive and qualified statuses.