The COPs will be privately placed with a closing on
In addition, Fitch affirms the following ratings:
--Implied general obligation (GO) rating at 'AA'.
The Rating Outlook is Stable.
The COPs are secured by lease payments subject to annual appropriation by the
KEY RATING DRIVERS
SOUND MANAGEMENT: The key credit strength supporting the 'AA' implied GO rating is the district's long track record of strong financial management including conservative budgeting and maintenance of adequate reserves.
AFFORDABLE DEBT LEVELS: Fitch considers key debt ratios to be low. Capital demands are manageable with no additional borrowing needs anticipated.
FAVORABLE ECONOMIC PROFILE: Long-term economic prospects remain favorable given the county's desirable quality of life, above-average wealth indicators, strong population growth projections, and a diversifying economy fueled by recent investments in the biotechnology sector.
STRONG APPROPRIATION INCENTIVE: The district has a strong incentive to appropriate lease payments given the large share of educational facilities captured under the master lease program and its reliance on certificate indebtedness to finance capital needs.
Fitch's key assumption supporting the Stable Outlook is the expectation for adherence to a balanced budget in fiscal 2015 with no further draw on reserves. Results inconsistent with this expectation could apply negative pressure on the rating.
This district is located in south
ACCUMULATED RESERVES ENABLED FLEXIBILITY
The district's financial performance over the last few years has benefited significantly from one-time revenues received in fiscal 2011 which built balances to a strong 12.3% of spending. The district has executed planned draws on these higher reserves through fiscal 2014 to weather the economic downturn. Fitch expects the district to maintain its financial cushion longer term at roughly the same level estimated for fiscal 2014, which is in excess of 6% of spending.
The fiscal 2013 budget was balanced with a
Fitch believes the district will be slightly more challenged in the current fiscal year (2014) to significantly outperform its budget as the district has begun budgeting for receipt of delinquent property taxes. However, the budgeted use of
Fitch expects the district's fiscal 2015 performance to reflect stable reserve levels. Failure to achieve budget balance and stabilize the erosion of financial reserves would weaken credit quality. In November of 2014, the district will be seeking voter approval to renew the .25 mills designated for the fine arts and choice programs; the four-year millage expires after the levy for fiscal 2015. In fiscal 2014, the levy is expected to raise
The district's overall level of financial flexibility should benefit over time with increasing capacity under the capital outlay millage capped at 1.5 by state law. Estimated maximum annual lease payments district requires roughly 73% of the fiscal 2014 levy with the remainder of the levy funding maintenance needs. Limited construction and debt needs, and prospects for tax-base growth should result in declining utilization of capital millage for debt service, freeing up additional funds for maintenance related operations.
The tax base increased a sizable 4.5% for fiscal 2014 and a robust 8.3% in fiscal 2015. While a final budget is not yet adopted, the current proposal does not include salary increases for employees nor does it include any use of reserves for structural balance.
Competition from charter school expansion as well as expenditure needs from federal mandates contribute to the need for enhanced accountability and responsiveness. The district is looking ahead to operational reforms for fiscal 2016 to achieve these aims.
LOW DEBT; ABOVE-AVERAGE VARIABLE-RATE EXPOSURE
District debt ratios are expected to remain low given the absence of new issue borrowing plans. Overall debt is just 1.6% of market value and under
Long-term liabilities related to pension and other post-employment benefits (OPEB) are manageable. The district participates in the
Total county carrying costs (debt service, pensions and OPEB) are a low 10.8% of total government expenditures. The OPEB unfunded accrued liability is
The district has
SOUND ECONOMIC GROWTH PROSPECTS
Global Insights (GI) projects strong gains in population and healthy consumer spending in
LIMITED APPROPRIATION RISK
Fitch believes the district has a strong incentive to appropriate for lease payments. An event of non-appropriation would terminate all current leases under the master lease and allow the trustee to repossess a total of 91 school buildings acquired pursuant to the master lease, representing approximately 46% of the educational facilities space available to the district. An event of non-appropriation could also impair the district's ability to issue additional COPs, the primary mechanism for funding long-term capital needs, with nearly
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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