The Rating Outlook is Stable.
The series 2012 bonds and series 2004 bonds (no underlying Fitch rating) also carry an 'AA' program rating based on enhancement provided by the
The bonds are secured by the levy of an ad valorem tax on all taxable property within the district without limitation as to rate or amount.
KEY RATING DRIVERS
STABLE AND DIVERSE MSA: As part of a stable and diverse MSA that incorporates parts of
DEPENDENT REVENUE STRUCTURE: The district's revenue structure is highly reliant on sources outside management's direct control, including state aid and voter approval for new property tax levies.
CONTINUING LEVIES PROVIDE STABILITY: Property taxes are derived from non-expiring operating levies, providing stability and limiting potential volatility to some degree.
HEALTHY RESERVE LEVELS: Reserve balances are healthy, the result of conservative budgeting and cost controls.
MANAGEABLE DEBT BUDEN: Overall debt burden should remain modest given no future debt plans and a permanent improvement levy which provides funds to maintain the district's facilities.
VOTER APPROVAL OF FUTURE TAX LEVIES: Voter approval for new tax levies in the medium term will be necessary for balanced operations and maintenance of reserve levels.
The district is located in
District enrollment has generally been stable and currently totals approximately 1,860. Management is projecting continued stable enrollment over the next few years.
LIMITED DISTRICT ECONOMY; STABLE AND DIVERSE MSA
The district has a limited economy, but the MSA economy is diverse and offers employment opportunities in higher education (a dozen institutions are within commuting distance), healthcare, retail and manufacturing. The largest employers in the MSA include
The area economy has historically been strong with below average unemployment rates. The unemployment rates as of
HIGHLY DEPENDENT ON STATE FUNDING
The district relies heavily on state aid, receiving approximately 80% of general fund operating revenues from the state. The district's state funding has been fairly stable over the last few years and is not expected to decline given its small, rural, and 'property poor' nature.
CONTINUING LEVIES SUPPORT FINANCIAL STABILITY
Property taxes comprise approximately 19.5% of general fund revenues. These revenues are derived from continuous levies, which Fitch views positively as they provide a measure of stability, as opposed to districts that have expiring levies which are vulnerable to electoral cycles. The district has not had an operating levy on the ballot for several years and is not considering one over the next few years, although by 2017-2018 a new voter approved tax levy will likely be needed to rebuild reserves to adequate levels. Total property tax collections are strong, averaging 102% over the last three years. The tax base is diverse with the top 10 taxpayers comprising 12% of fiscal 2013 taxable assessed value. Additionally, the district has the ability to implement, with voter approval, an income tax of up to 2%, something management is not contemplating.
STRONG FISCAL MANAGEMENT PRODUCES HEALTHY RESERVE LEVELS
The district's tenured management team practices conservative budgeting and has shown a willingness and ability to control expenses. For fiscal 2013 (year-end
FIVE-YEAR FORECAST PROJECTS OPERATING DEFICITS STARTING IN 2014
MANAGEABLE DEBT POSITION
The district's overall debt burden is modest at 1.8% of market value and
Pensions and other post-employment benefits (OPEB) are provided through the School Employees Retirement System (SERS) and the State Teachers Retirement System (STRS). Both SERS and STRS are state administered, cost-sharing, multiple-employer defined benefit systems.
The district's combined fiscal year 2013 pension required contributions, OPEB payments, and debt service costs as a percentage of governmental spending are manageable at 12.5%. However, pension related costs could rise over time if STRS moves towards full funding of its actuarially required contribution (ARC). The plan funded only 46% of the ARC in fiscal 2013. The SERS plan has been fully funding its ARC.
STRONG PROGRAM ESSENTIALS
The district's bonds also benefit from participation in the
For more information on the
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,
--'Tax-Supported Rating Criteria', dated
--'U.S. Local Government Tax-Supported Rating Criteria', dated
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria
Source: Fitch Ratings
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