The Rating Outlook is revised to Stable from Negative.
The bonds are secured by an unlimited ad valorem property tax pledge.
KEY RATING DRIVERS
DOWNGRADE REFLECTS WEAKENED RESERVE POSITION: The rating downgrade reflects the district's planned deficit spending in fiscal 2014 and fiscal 2015 that will result in significantly weakened general fund reserves. The Stable Outlook reflects expectations that the district will return to balance in fiscal 2016.
ABOVE-AVERAGE SOCIOECONOMIC PROFILE/RESILIENT TAX BASE: Socioeconomic indices are generally favorable, with above-average wealth levels and below-average unemployment, and the tax base has been generally stable throughout the economic downturn.
MANAGEABLE LONG-TERM LIABILITIES: Overall debt ratios are moderate. The district's total carrying costs of debt service, actuarially required pension contributions, and other post-employment benefit (OPEB) as a percentage of spending are affordable. Pension costs will increase as the state implements its plan to increase contributions to the poorly funded state pension plan for teachers.
SUCCESS OF OUTYEAR BALANCING PLAN: The Stable Outlook assumes that the district will achieve balanced operations and begin stabilizing financial reserves in fiscal 2016 as currently planned.
The district is coterminous with the city of
GENERAL FUND DEFICIT CONTINUED IN FISCAL 2013
REDUCTION OF RESERVE LEVELS TO CONTINUE IN FISCAL 2014 & 2015
Although the improved state revenue picture has positively impacted the district's general fund revenues in fiscal 2014, the increased state funding has been passed on to employees in the form of salary increases. Management is estimating a fiscal 2014 general fund deficit of
A smaller deficit of
Management indicates the district will return to balanced operations in fiscal 2016, and projections call for a
STRONG SOCIOECONOMIC CHARACTERISTICS/STABLE ECONOMY AND TAX BASE
The city's economy has long been tied to the media and entertainment industry with
The district's taxable assessed value (TAV) has proved resilient throughout the economic downturn, with only a slight 0.7% dip in fiscal 2012 followed by growth of 1.6% and 3% in fiscal years 2013 and 2014. The market value per capita is a high
MANAGEABLE LONG-TERM LIABILITIES
The district's overall debt levels are moderate, at
District employees are covered under the
The district's total carrying costs, including debt service, actuarially required pension contributions, and OPEB pay-as-you-go payments are considered affordable by Fitch at 13.5% of governmental spending. Carrying costs are expected to rise sharply as the state addresses substantial unfunded liabilities in the CalSTRS. Statutory contribution rates for CalSTRS have been well below the level required to amortize existing obligations. The Governor's proposed fiscal 2015 budget includes a long term plan to close the funding gap which would result in substantially higher pension costs.
Additional information is available at 'www.fitchratings.com'.
U.S. Local Government Tax-Supported Rating Criteria
Tax-Supported Rating Criteria
Source: Fitch Ratings
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