HB 440 Receives First Hearing in House Financial Institutions Committee

COLUMBUS - State Representative DJ Swearingen (R-Huron) and State Representative Andrea White (R-Kettering) had sponsor testimony today on House Bill 440 in the Ohio House Financial Institutions Committee. 

“This is common-sense legislation that will support or farmers, lower the financial burden on our hospitals and will work to reduce the costs for borrowing by public universities,” said Swearingen.  

This legislation focuses on three proposed reforms. First, it enhances the Ag-LINK deposit program supporting our farming community.  The Ohio Treasurer’s Office has been administering the Ag-Link deposit program for decades. This legislation will eliminate Ag-LINK’s current program caps, ensuring the agriculture community can access lower-cost capital when they need it most.  In addition, agricultural co-ops which provide valuable contributions to Ohio’s economy will now be eligible for the program.

Second, this legislation will help hospitals throughout Ohio save money. Many of Ohio’s largest institutions, including major hospital systems, utilize a specific borrowing tool called a Variable Rate Demand Obligation (VRDO). VRDO debt issuance requires a separate entity to agree to purchase the debt if the market yields no investors by; therefore, serving as a “buyer of last resort.”  Typically, banks serve in this capacity. However, the Ohio Treasury can step into this role by leveraging its strong liquidity position. This will help Ohio’s hospital systems lower their overall borrowing costs.  

Third, the Ohio Gains initiative will work to reduce borrowing costs for public universities. Currently, the debt of State Universities in Ohio is viewed as a legitimate investment of the Treasury.  The credit rating of our public four-year institutions would automatically be enhanced if they were permitted to leverage their State Share of Instruction (SSI) only when issuing debt to the Treasury. This reform aims to maximize the value of state dollars invested in our universities like never before. It will provide a unique cost-saving program for our four-year universities while also generating returns on the investments of the treasury.

“This legislation ensures that our tax dollars stay within the state and benefit Ohioans,” added Swearingen.