BATON ROUGE — The state's cost of borrowing money is going down.

Treasurer John Fleming told the state Bond Commission on Thursday that Standard & Poors had improved Louisiana's bond rating from AA- to AA. The higher rating means the cost to borrow money will go down for long-term projects like road construction.

An analyst for S&P Global sent a note to investors Wednesday explaining the move.

"The upgrades reflect our view of Louisiana's demonstrated commitment to improving and maintaining reserves above levels that we consider very strong and the state's ongoing effort to reduce unfunded pension liabilities through its strong pension funding discipline," analyst Rob Marker wrote.

Under Gov. John Bel Edwards, Louisiana had seven consecutive years with a better-than-balanced budget. Louisiana dedicates its surpluses to a rainy day fund and a variety of trust funds. 

Most recently, the state sent $81 million to the rainy day fund, and another $32.5 million toward unfunded accrued liabilities. The $32.5 million is 10 percent comprised 10 percent of the surplus, but beginning in 2025, the state must direct 25 percent of the surplus to the unfunded liabilities — the same as the amount to the rainy day fund.

The rest of the recent surplus ($211.5 million) went to transportation and development, coastal protection, and capital development projects. Including money from the state's main reserve accounts (budget stabilization and revenue stabilization trust fund), Louisiana will have a reserve of about $3.31 billion, S&P said.

"We anticipate that reserves will remain very strong through our outlook period," the investment house said.

Fleming said Gov. Jeff Landry's plan to reduce state spending helped S&P's decision to improve Louisiana's ranking.

Investment houses rate risk for their clients, and Louisiana's risk level often goes up after storms (think Katrina) or economic doldrums (think depressed energy markets). Louisiana also suffered when Gov. Bobby Jindal raided a number of reserve funds to balance the books.

Moody's Investors Service improved Louisiana's risk rating two years ago, as finances improved.