The bonds are scheduled for negotiated sale during the week of
The Rating Outlook is Stable.
The bonds are direct obligations of the district and are secured by its unlimited ad valorem tax pledge.
KEY RATING DRIVERS
STRONG FINANCIAL PROFILE: The district's financial profile is a positive credit factor characterized by large reserve levels, and a consistent record of conservative budgeting practices.
STABLE AND DIVERSE ECONOMY: The regional economy is anchored in diverse manufacturing, retail and agriculture which continue to demonstrate low unemployment. Slightly below average income levels are growing faster than state and national averages.
STABLE ENROLLMENT, HIGH RELIANCE ON STATE FUNDING: District population is expected to continue to grow at a modest, manageable rate, while enrollment appears to have stabilized after mild declines. Enrollment stability and very modest growth would temper budgetary risks posed by high reliance on enrollment-based state funding for operations.
ELEVATED DEBT BURDEN: The district's overall debt levels are high, although this sizable new money issuance is expected to meet the district's capital needs for the next decade and beyond. The district has no pension or post-employment benefit obligations. Fitch believes the debt load is manageable due to the district's moderate carrying costs and favorable economic prospects.
SHIFT IN FUNDAMENTALS: The rating is sensitive to shifts in fundamental credit characteristics including the district's healthy financial profile. Maintenance of solid reserves and economic stability are key credit consideration.
The district, while fairly small, is the tenth largest school district in the state. K-12 enrollment of 7,305 for 2014 is down from a peak of 7,431 in 2010. The district is located in central
SOLID FINANCIAL RESERVES MAINTAINED
Annual positive general fund operating margins have resulted in the accumulation of solid overall reserves despite the challenges posed by state imposed limitations which preclude the district from carrying reserves within the general fund. Conservative budgeting of enrollment coupled with close expenditure management has enabled the district to maintain surplus general fund operating margins. Annual year-end surpluses have been transferred to various other funds including contingency, capital outlay and special education.
The collective amount of these funds has consistently been well over 10% and provides significant liquidity and cushion against potential state funding changes. Cash balances at
The district levies local taxes at 30% of general fund expenditures for its annual local option budget (the maximum without voter approval) and six (of eight maximum) mills for capital outlay. Instructional salaries and benefits are the primary expenditures which the district has been able to successfully manage given modest recent enrollment declines. The district is self-insured for healthcare and consistently maintains an actuarially determined reserve of around
MODERATE DEBT BURDEN
The district's overall debt profile is mixed but overall moderate. Net debt is high at 7.2% of fiscal 2014 market value and
These renovations are expected to satisfy the district's capital needs for the next decade and beyond which, coupled with a lack of post-employment benefits obligations, will keep district carrying costs low. District pension liabilities are limited to its participation in the state pension plan administered by the Kansas Public Employees Retirement System (KPRS). The state currently makes all employer contributions on behalf of the district. However, given KPERS plan funding rate and ratios remain low, district budgets are susceptible to future funding changes by the state.
STABLE ENROLLMENT AND TAX BASE
The Salina regional economy proved very resilient during the recent economic downturn largely based on its diverse manufacturing and distribution oriented economy. Population and enrollment trends have been overall flat over the past decade and are expected to be very modestly positive.
The district's tax base has been flat since 2008 with improved building permit activity in 2013 and 2014 expected to generate modest growth. The tax base is a moderate
City and county unemployment rates remained well below state and national averages through the recent downturn with city at 5.3% in
Additional information is available at 'www.fitchratings.com'.
In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope and
--'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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