The Handbook of Municipal Bonds

CHAPTER 67

Analyzing Human Service Provider Bonds

Ruben Selles Director, Head of Municipal Risk CIFG

 

 

 

Over the last several decades many of the social and human services that had been the responsibility of state and local governments have been assumed by private providers. A movement toward deinstitutionalization has resulted in a shift in the care for people with mental or developmental disabilities. Many large, governmentally run institutions have been closed down and replaced with small community-based providers that provide educational, vocational, and residential services. As this trend continues the capital needs of these private providers will be met in large part by the public capital markets and for the not-for-profit operators this means the tax-exempt bond market.

The definition of human service providers (HSPs) has been expanded so that it now includes private providers of care and services to people with mental or developmental disabilities, those with drug and alcohol dependencies, and those in prison. The broadest definition includes providers of services to the unemployed, day care for children and the elderly, and a wide range of family services.⁷⁶⁰ Although there are some similarities among these providers, there are significant differences that make a common analytical approach to evaluate the creditworthiness of these providers difficult to develop.

The focus of this chapter will be on those providers that specialize on people with mental and developmental ...