DEBT ADMINISTRATION

          The State finances many of its major capital needs by issuing bonds. Some of this debt is general obligation debt backed by the full faith, credit and taxing power of the State. Much of the debt, however, is revenue bonds and notes associated with specific State agencies and discretely presented component units. Specific revenue flows of particular agencies and discretely presented component units service revenue debt.

          Moody's Investors Service has rated South Carolina's general obligation bonds as "Aaa," and Standard & Poor's and Fitch Investors Service, Inc. rate these bonds as "AAA," the highest ratings awarded. The Comptroller General's Office annually furnishes the State's Comprehensive Annual Financial Report and related information to the bond rating firms. This process is critical to ensuring that the State maintains its current high bond ratings.

          During the fiscal year ended June 30, 1998, South Carolina issued $85.854 million and retired $101.915 million in general obligation bonds payable by governmental funds. Of the bonds issued, $47.500 million were State highway bonds. The State budgets and pays principal and interest on capital improvement bonds from current resources of the Budgetary General Fund. The Department of Transportation Special Revenue Fund pays the debt service on highway bonds. At June 30, 1998, the Higher Education Funds reported State institution general obligation bonds outstanding of $84.465 million.

          The State's available legal debt margin at June 30, 1998, was $5.535 million for institution bonds. State law limits annual debt service expenditures rather than directly limiting the amount of outstanding debt for general obligation bonds/notes. The annual debt service margin at June 30, 1998, was $48.316 million for highway bonds and $93.895 million for general obligation bonds excluding institution and highway bonds.

          Net general obligation bonds/notes outstanding per capita (which excludes general obligation bonds payable from Higher Education Funds) is a useful indicator to citizens, investors and management of the State's debt position. The following table shows this amount at June 30 for the last three years:

          The General Services Fund, an Internal Service Fund, had $35.569 million of limited obligation lease revenue bonds outstanding at June 30, 1998.

          The primary government's entities had revenue bonds, notes, and certificates of participation of $1.256 billion outstanding on June 30, 1998. Revenue bonds, notes, and certificates of participation outstanding (expressed in thousands) by agency were:

          During the fiscal year ended June 30, 1998, the Education Assistance Authority advance refunded $46.300 million in revenue bonds to have bonds under the 1993 bond resolution instead of the 1979 bond resolution and obtained an economic gain of $779 thousand. For additional details on this refunding as well as advance refundings in the Higher Education Funds, see Note 11 in the Notes to the Financial Statements.

          In addition, discretely presented component units had the following amounts of bonds and notes outstanding (expressed in thousands) at June 30, 1998:

          During its fiscal year ended December 31, 1997, the Public Service Authority (Santee-Cooper) advance refunded $205.820 million in revenue bonds to reduce its total debt service payments over the next thirty-four years by approximately $22.228 million and to obtain an economic gain of approximately $11.885 million. For additional details on this refunding and other Authority debt transactions, see Note 11 in the Notes to the Financial Statements.