The bonds are expected to sell via negotiated sale the week of
The Rating Outlook is Stable.
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 ECONOMY: The economy benefits from its close proximity to
STRONG FINANCIAL PROFILE: The district's financial profile is a positive credit factor characterized by solid reserve levels, active expense management and permanent operating tax levies with strong voter support.
MANAGEABLE LONG-TERM OBLIGATIONS: The district's overall debt levels are high due to recent significant borrowing which will meet the district's capital needs well into the future. Carrying costs inclusive of debt service, pension and other post-employment benefits (OPEB) are manageable.
SHIFT IN FUNDAMENTALS: The rating is sensitive to shifts in fundamental credit characteristics including the district's healthy financial profile. Maintenance of solid reserves is a key credit consideration.
The district population of 42,620 encompasses 36 square miles on the northern edge of
Enrollment has remained fairly stable over the last few years, totalling 5,580 for the 2013/2014 school year. Enrollment may increase slightly with open enrollment implemented for the coming school year.
STABLE AND DIVERSE ECONOMY
The economy is broad and benefits from its close proximity to
The district's high market value per capita of
DEMONSTRATED VOTER SUPPORT FOR TAX LEVIES
Property tax revenues represent the largest source of general fund revenue at 62%. Unlike many
HEALTHY RESERVES AFFORD FINANCIAL FLEXIBILITY
Audited results showing ebb and flow of the general fund balance is very common among
For fiscal year 2013 (year-end
District officials have pro-actively managed expenses. Management's implementation of a budget reduction plan, known as 'Plan A' has enabled the district to reduce annual expenditures by a cumulative 10% since 2011.
Positive operations through fiscal 2018 lead to cash balances of
ABOVE-AVERAGE BUT MANAGEABLE DEBT BURDEN
Fitch considers the district's overall debt burden moderately high at 5.4% of market value. Amortization is slow with only about 20% of debt retired in 10 years, leaving little flexibility to accommodate future issuance. However, the district has no plans for additional debt as all school facilities are new or have recently undergone major renovations.
The district contributes to the School Employees Retirement System (SERS) and the State Teachers Retirement System (STRS) to fund both pension and OPEB. Both SERS and STRS are cost-sharing, multiple-employer defined benefit plans and the district regularly contributes 100% of the annual required payments for each system. At
Total carrying costs for debt service, pensions and OPEB are affordable at 13.4% of total governmental fund expenditures. The SERS plan has been fully funding its ARC. 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. Contributions to STRS represents 3.2% of the districts fiscal 2013 government fund spending and Fitch believes the district could absorb a moderate increase.
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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