The State's Credit Fundamentals Continue to Improve
23
Security for Illinois General Obligation Bonds
Security
The full faith and credit of the State is pledged for the punctual payment of principal and interest
under the General Obligation Bond Act (the "Bond Act") of the State
The State can draw from all State funds in the State Treasury that are not restricted by
law to another use if needed to pay debt service on GO bonds
Statutorily
Mandated Debt
Service Set Asides
(GOBRI)
Under the Bond Act, monthly transfers are made from various State funds to the General
Obligation Bond Retirement and Interest Fund (GOBRI), in amounts sufficient to pay the next
interest and principal payments when due, which effectively results in the State transferring
1/12th of the next principal payment and 1/6th of the next interest payment every month
GOBRI is a separate fund in the Treasury that is dedicated to the payment of debt service
on GO bonds and short-term debt
Appropriation of
Funds
Additional
Protection under
Illinois
Constitution and
State Laws
• The Bond Act requires the Governor to include an appropriation in each annual budget of monies
in an amount necessary to pay all principal and interest due and further requires the General
Assembly to make appropriations annually to pay debt service on outstanding GO Bonds from
GOBRI
• In the absence of appropriations, the Bond Act itself constitutes an irrevocable and continuing
appropriation of all amounts necessary to pay principal and interest
Principal and interest on all outstanding GO Bonds must be paid even in the absence of a State
budget
• The Bond Act explicitly provides bondholders the remedy to sue the State to compel payment of
GO bonds
The provisions of the Bond Act, pledging the full faith and credit of the State to GO bonds issued
thereunder, are by their terms irrepealable to any outstanding GO bonds
The Illinois Constitution contains a "non-impairment" clause that prohibits action by the General
Assembly that would, under contract law, impair the obligations of a contract between the State
and its bondholders
AL OF THE STAT
OF ILLIN
AUG. 26 1818View entire presentation