The Rating Outlook is Stable.
The bonds are secured by ad valorem taxes levied against all taxable property within the district, without limitation as to rate or amount. In addition, the series 2008 and 2010 bonds are secured by the
KEY RATING DRIVERS
STRONG FINANCIAL MANAGEMENT: Consistently positive operating margins have yielded significant general fund reserve levels and liquidity, providing the district with a high degree of financial flexibility.
ADVANTAGEOUS LOCATION: The district benefits from its location in a larger industrial and retail regional economy along major transportation corridors. Local employment indicators are positive.
SIZABLE DEBT LOAD: Aggregate debt levels and the annual debt burden on the budget are high and amortization is slow. The debt service tax rate is elevated and near the state's tax rate cap for new money debt issuance, but future capital needs for the district reportedly are minimal.
RATING STABILITY EXPECTED: The rating is sensitive to fundamental shifts in various credit characteristics, including the district's strong financial management practices. The Stable Outlook reflects Fitch's expectation that such shifts are unlikely.
The district is located roughly 120 miles east of
STABLE AREA ECONOMY
The district is located in the
The area employment picture is positive, with a fairly low unemployment rate and expanding employment count in the city.
Both indicators improved during the 12-month period ending
Taxable assessed value (TAV) has been stable the last several years after a modest decline in fiscal 2011. Fiscal 2014 TAV was flat from the previous year at
POSITIVE FINANCIAL OPERATIONS, STRONG BALANCE SHEET
Several years of positive operating results have significantly increased reserves, with fiscals 2013 results producing a
The district historically adopts structurally balanced budgets, and management expects fiscal 2014 to mark another year of positive operating results yet with a more modest surplus than recent years have produced. As of
WEAK DEBT PROFILE; LIMITED FUTURE CAPITAL NEEDS
Key debt ratios are above average due to the issuance of all of the district's
Overall debt is a high 5.8% of full market value (MV) and
OTHER LONG-TERM LIABILITIES MANAGEABLE
Retiree pension and healthcare benefits are provided through the Teacher Retirement System of
The district's annual contribution to TRS is determined by state law, as is the contribution for the state-run post-employment benefit healthcare plan. The district's cost for pension and other post-employment benefits (OPEB) represented less than 1% of governmental fund expenditures in fiscal 2013, as plan contribution amounts are principally paid by the state and district employees.
The state's payment of district pension costs is an important credit strength as it keeps overall carrying costs manageable in the face of a large and growing debt burden. Carrying costs for the district (debt service plus pension and OPEB costs) remain manageable, consuming 17.1% of governmental fund spending in fiscal 2013; the moderate carrying cost burden is also due to the slow pace of amortization. Fitch will continue to monitor the level of state support for school district pension payments, noting contributions for all districts in the state will increase modestly from 0% to 1.5% of the statutory minimum portion of payroll beginning fiscal 2015.
The judge agreed to reopen testimony 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,
--'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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