State of California Issuing $2.3 Billion in General Obligation Bonds

California Fund Balance Ratio Trends

State of California Fund Balance (General Fund and Rainy Day Fund) Trends as a Percent of General Fund Revenues.  Source:  Merritt Research Services, LLC

The State had a 2018 population of 39,557,045 .  The largest city in California is  Los Angeles with a 2017 population of just over 3,999,759.

The State registered an unemployment rate of  4.2% at the end of December, 2018, which is .3 of 1% higher than the national unemployment rate of 3.9%.    The  State’s median household income was $67,169, which is above the national median of $57,652. The State’s employment growth rate has exceeded that of the nation in four of the last five years.  The exception occurred in most recent year, 2018, in which California’s annual growth rate was 1.3% vs. the national rate of 1.6%,


According to  Merritt Research Services, LLC, a provider of municipal bond research and data,  the State’s total governmental activities revenues grew by 4.1%  in fiscal year 2017 over the previous year.

About the Bonds

The State intends to sell the bonds by negotiated sale during the week of March 4, 2019.   The principal and interest on all State General Obligation bonds, including the Bonds  being sold,  are payable from moneys in the General Fund, subject under state law only to the prior application of moneys in the General Fund to the support of the public school system and public institutions of higher education.  Although the Bonds constitute a valid and binding obligation of the state,  and the full faith and credit of the State is pledged,  the pledge of the general fund does not create a lien on any moneys in the general fund or any other assets of the state.

The bonds are being sold in two parts.  The $250,000,000 General Obligation various purpose bonds will be used to finance various public projects  and  $2,050,000 to refund a bond issue from 2009 .   The remaining proceeds are to pay the costs of issuance.  Interested parties should consult the official statement for more specific and final details on the use of bond proceeds and any intended refundings.  All proposed financing terms are subject to change prior to the final sale of the Bonds.

According to the bond prospectus, the bonds have been rated Aa3 by Moody’s,  AA- by S&P Global Ratings Group and AA- by Fitch.

Interest on the Bonds is in  the opinion of Bond Counsel tax-exempt for federal income and from personal income taxes in the state of California.

Details on the purposes, tax-status, security,  as well as other matters  and risks pertaining to these  bonds can be found in the preliminary official statement (register on the MuniOS website.  After registering, visitors can link direct to the official statement  by searching for the State of California.

Statistical Snapshot of Key State of California Financial and Economic Indicators

Featured Bond State of California Fiscal Year 2017 fiscal snapshot

The State of California, Fiscal Year 2017 fiscal snapshot. Source: Merritt Research Services, LLC


The table  above (click to expand) is a quick snapshot of financial characteristics of the state of California  as of 06/30/2017, compared with the 2017-2018 medians for other cities, courtesy of Merritt Research Services, LLC.  Merritt has many of the sector medians publicly available and regularly updated on their Benchmark Central page. (Merritt believes the data to be reliable but does not make any representations as to its accuracy or completeness.)In addition to the Merritt information related to the featured bond, more municipal bond related information can be found on MuniNet Guide’s municipal bond calendar, city, state, and county pages, and our employment database. 

These facts and numbers are for informational purposes, and should not be considered an official disclosure for potential investors. Investors should consult the official statement. None of the information provided should be construed as a recommendation by MuniNet Guide, MuniNet LLC, Merritt Research Services LLC, or any of their employees. Information and analysis is for informational purposes only.  Potential investors should rely only on the official documents and figures provided in the official statement (prospectus).  Although the numbers presented in this summary are primarily derived from public documents, including issuer audits, issuer reports and other public sources such as federal reporting agencies ,  they are not intended to replace official information presented in connection with the bond sale. Medians may differ from official sales documents due to methodology or survey base variances.