The bonds have been placed on Rating Watch Negative.
The bonds are secured by an unlimited property tax on all taxable properties in the district.
KEY RATING DRIVERS
NEGATIVE FINANCIAL CERTIFICATION: The downgrade reflects material deterioration of the district's multi-year financial projections and negative financial certification by the
COE ASSIGNS FISCAL ADVISOR: The COE has assigned a fiscal advisor (FA) with stay and rescind powers to assist the district in rectifying its strained financial position.
FULL CREDIT REVIEW PLANNED: The Rating Watch Negative reflects the possibility that the rating may be downgraded further, pending discussion with district management. The one-notch downgrade to 'A' is an interim rating action based on limited information available to Fitch. The 'A' rating reflects the highest rating level the district could achieve based on that information.
FURTHER DOWNGRADE LIKELY: Fitch expects the rating will be downgraded further following its pending review, based on information now available to Fitch, unless management can demonstrate that the district's current financial position and projections are materially better than suggested by publicly available sources.
COE NEGATIVELY CERTIFIES FIRST INTERIM, ASSIGNS FA
In January, the COE reviewed the district's first interim financial report, corrected certain flawed revenue assumptions, and projected the district would not meet its financial obligations by fiscal year end 2014, including maintenance of a minimum 3% general fund balance. According to the COE, the modified projections show a decline in fund balance to just
The COE negatively certified the district's first interim financial report, and assigned a FA to the district. COE-appointed FAs generally assist fiscally stressed districts with financial and budgetary decision-making and the assigned FA was granted stay and rescind power over board decisions. Fitch views as a positive this additional layer of oversight and financial expertise. However, FAs do not have the ability to impose decisions on the board, to modify existing labor contracts, or to impose concessions on bargaining units.
Fitch intends to conduct a full review of the district's credit rating as soon as possible, including a discussion with management. An inadequate ability to sufficiently address these concerns likely will lead to further negative credit actions over the short term.
Additional information is available at 'www.fitchratings.com'.
--'Tax-Supported Rating Criteria' (
--'U.S. Local Government Tax-Supported Rating Criteria' (
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria
Source: Fitch Ratings
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