An audit of general obligation bond sale practices disclosed that Missouri taxpayers could be better served. Our audit focused on general obligation bonds rated AA and AAA, which are considered the most secure of all municipal debt.
Governments use general obligation bonds to finance services and projects for the citizenry.
They pay back the bonds with taxpayer s property taxes and other general revenue. Therefore, government entities that issue these bonds should strive for the lowest cost, which are generally provided through competitive sales. Most bonds were not sold competitively An average of 87 percent of Missouri s general obligation bonds sold since 1993 were issued without the benefit of competitive bidding. Political subdivision officials placed reliance on private firms to negotiate sales, which increased costs to taxpayers Local officials such as school superintendents and city administrators have too often relied upon the advice of familiar bond negotiators instead of seeking open bids assuring the most competitive rate of return for taxpayers. Although Missouri s general obligation bonds have historically attracted a nationwide market because of the state s high credit and management rating, officials opted to forego competitive sales and allow private sale bond buyers to negotiate the sales.