Pennsylvania just closed a $950 million general obligation bond sale at what Department of General Services spokesman Jay Pagni said was a "very good interest rate" of 2.904 percent, even though the financial rating houses continue to warn the state about its unfunded public pension liability of over $40 billion.

"It’s there and we have to address it," Pagni said in reference to the unfunded liability. "But so far we are still managing to get good ratings and low rates."

Bank of America Merrill Lynch was the successful bidder among six companies.

Pagni said the proceeds of this bond sale allow the state to finance its public capital projects, provide grants to local water and sewer projects, and provide funding for Growing Greener — a grant program aimed at addressing critical environmental concerns.

Pagni said that Fitch Ratings, Moody’s Investor Service and Standard & Poor’s have acknowledged Pennsylvania’s relatively strong financial position when rating its bonds.

At the same time, Fitch Ratings points to a negative rating outlook and reflects its concern with "expected significant growth in annual pension funding obligations."

It also states that maintaining the current "AA+" rating will "depend upon the commonwealth’s ability to stabilize the downward trajectory in pension funding levels while continuing a commitment toward fiscal balance and replenishing reserves."

Standard & Poor’s notes that it has "the potential … to lower the state rating to ‘AA-’ in the next two years in the absence of meaningful pension reform efforts or significant economic growth that would help mitigate the impact of growing pension costs on Pennsylvania."

Moody’s has echoed these concerns, stating, "The commonwealth will experience significant budgetary pressure over the next five years as the pension contribution increases. … The unfunded liability is projected to grow to $65 billion from the current $41 billion, materially increasing the commonwealth’s adjusted debt ratio."