The bonds are scheduled for competitive sale on
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 by state government, several hospitals, and small manufacturing, the stability of which has maintained low city and county unemployment rates. Income levels are below average.
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.
MODERATE DEBT BURDEN: The district's overall debt levels are high relative to taxable market value, although this sizable new money issuance is expected to meet the district's capital needs for the next decade and beyond. The district currently makes no pension payments and has minimal, capped other post-employment benefit obligations. Fitch believes the debt load is manageable due to the district's moderate carrying costs and stable 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 considerations.
The district, population 114,499, encompasses 36 square miles and serves most of the city of
SOLID FINANCIAL RESERVES
Following modest planned general and other fund drawdowns over the past three years, the district's reserves remain strong. General fund unrestricted fund balance was
The sizable reserves somewhat mitigate the district's high dependence on state funding, over 70% for 2013. Fitch expects stable enrollment trends and conservative budgeting will enable the district to maintain continued sizable reserves.
The district levies local taxes at 30% of general fund expenditures (the maximum without voter approval) for its annual local option budget and eight (also the maximum) mills for capital outlay. Instructional salaries and benefits are the primary expenditures, which the district has been able to successfully manage to accommodate modest recent enrollment declines.
MODERATE DEBT BURDEN
The district's overall debt profile is mixed. Debt is high including a
These renovations are expected to satisfy the district's capital needs for the next decade and beyond which, coupled with minimal and capped other post-employment benefits obligations (OPEB), will keep district carrying costs low if the state continues to make all employer pension contributions on behalf of the district. The district participates in the state pension plan administered by the Kansas Public Employees Retirement System (KPRS). However, district budgets are susceptible to future funding changes by the state given KPERS's low plan funding rate and large unfunded liability.
STABLE ENROLLMENT AND TAX BASE
The district's tax base was modestly positive for 2013 but remains down 6.7% from the peak in 2006. City building permit activity has been improving slightly but given the largely developed nature of the district, Fitch does not expect significant tax base growth. The per capita tax base is low at
City and county unemployment rates remained well below national averages through the recent downturn, with city's rate at 5.6% 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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