The Rating Outlook is Stable.
The bonds are general obligation (GO) bonds of the district, secured by an unlimited ad valorem tax pledge.
KEY RATING DRIVERS
TAX BASE RECOVERY: The recessionary decline in the area's construction and housing markets led to a sharp drop in the tax base post-recession, reflecting a two-year lag in actual economic performance. Consistent with management's prior expectation, recovery will occur in fiscal 2015.
FINANCIALLY SOUND; CHALLENGES REMAIN: The expiration of two tax overrides and losses in secondary assessed value (SAV) have pressured the district's financial operations in recent years, causing the district to implement cost saving measures. The successful transition of four of the district's five elementary schools into charter status provides additional revenues that also help to mitigate these losses.
WEALTHY, TAX AVERSE DISTRICT: Measures of income and wealth trend higher than county, state and national averages. However, these favorable metrics are offset to a large degree as the district's population has rejected budget override proposals in recent years to maintain lower tax levies.
LOW DEBT BURDEN: The district is an infrequent borrower with a low debt burden. Pension costs are affordable and well-funded.
SOUND FINANCES: The rating is sensitive to the maintenance of sound finances, and weakening of reserves below the modest amounts
The district is in northeastern
The recession and subsequent collapse of the regional housing market impacted the largely residential district with a cumulative decline in SAV of 45% from its peak in 2010. Recovery in SAV will occur in fiscal 2015 with an uptick of 6.7%. The district is wealthy as measured by a market value per capita of
ADDITIONAL REVENUE FROM CHARTER SCHOOL STATUS
The citizenry has displayed an aversion to increasing local taxes in support of education, as most recently evidenced in
To manage the lost revenue from the expiration of the overrides, the district converted four elementary schools into charter schools, of which the full benefit was realized beginning fiscal 2014. The state of
The district's fiscal 2013 revenue remained fairly flat after declining 5.1% and 13.0% in fiscal years 2011 and 2012, respectively, primarily due to lower property tax revenues. To address the shortfalls management has reduced expenditures through staffing cuts, energy savings, and contract management savings, among other measures. Management estimated a
LOW DEBT BURDEN
The district's annual debt service accounts for 6% of general fund expenditures. Debt per capita is moderate at
The district participates in a state-sponsored, cost-sharing, multiple-employer pension program. The state program's funding level at fiscal 2013 year-end was satisfactory at 75.8% but weaker at 67.8% based on a more conservative 7% investment rate. The state establishes statutorily required contribution levels, and the district's contributions equal the required amounts at a moderate 5.2% of general fund spending in fiscal 2013. District costs related to other post-employment benefits are manageable and limited to a subsidy for health insurance.
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' (
--'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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