An Audit Report on Certification of the Permanent School Fund's Bond Guarantee Program for Fiscal Year 2007
April 2008
Report Number 08-031
Overall Conclusion
The State Auditor's Office certifies that, for the fiscal year ended August 31, 2007, the amount of school district bonds guaranteed by the Permanent School Fund's (Fund) Bond Guarantee Program (Program) was within the two limits applicable to the Program. One limit, prescribed by Sections 45.053(a) and (d) of the Texas Education Code, protects the Fund by minimizing the risk of loss to the Fund. The other limit, which was established by an Internal Revenue Service (IRS) letter ruling, is intended to prevent reductions in federal tax receipts due to bond arbitrage (issuing tax-exempt bonds for the purpose of investing the proceeds at higher rates than the tax-exempt bonds).
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