"We undertook this research to better inform investors about how the credit quality of state credit enhancement programs affects the credit quality of local municipalities, most often public school districts. Many investors are exposed to these programs because public school debt is a popular holding across both individual bondholders and municipal bond fund shareholders," Elizabeth Foos, municipal credit analyst for Morningstar, said. "These enhancement programs provide bondholders with an additional level of security and lower the cost of financing for municipal bond issuers, yet the programs vary widely across the 28 states that offer them." To determine the overall credit quality of State Permanent Fund Programs, Morningstar evaluated the following factors: Morningstar rates the Security Pledge, Program Procedures, and Pledged Revenues factors on a scale of Good, Fair, and Poor. The Correlation to State Credit Quality ranges from Very High, High, Moderate, Weak and Not Correlated.