Hop to It: Disclosure Filings for IPAs

Securities and Exchange Commission Rule 15c2-12 governs continuing disclosure. Under this rule, a school issuing most bonds must enter into an agreement to provide certain information on an annual basis to the Municipal Securities Rulemaking Board (MSRB) about those bonds and the school. The annual disclosures are intended to update bondholders about the financial health and operating conditions of the school over time. These disclosures are available to investors and the public on the Electronic Municipal Market Access (EMMA) website.

In addition to the annual disclosure requirements discussed in the November 2023 edition of School Law Notes, Rule 15c2-12 also requires that school personnel disclose certain “significant” events that may impact the stability of existing bonds, such as rating changes, payment delinquencies, or the incurrence of a subsequent financial obligation, if the event is material and could impact bondholders. Schools incurring a subsequent financial obligation must submit an event disclosure to EMMA “[i]n a timely manner,” but “not in excess of ten business days after the occurrence of the event.”

Installment purchase agreements (IPAs) and lease purchase agreements (LPAs), which are frequently used to purchase equipment or school buses, are considered “financial obligations” under Rule 15c2-12 and must be disclosed on EMMA within ten business days after entering into them.

As a courtesy, it is Thrun’s practice to notify a school’s dissemination agent when assisting the school with an IPA or LPA. Still, we recommend that schools independently keep their dissemination agent apprised of any new debt incurred. For Thrun Policy Service subscribers, continuing disclosure protocols are addressed in Policy 3212 (“Post-Issuance Disclosure Compliance”).