In addition, Fitch affirms an 'AA+' implied general obligation rating of the district.
The Rating Outlook is Stable.
The certificates are secured by lease payments made by the district to the trustee as assignee of the
KEY RATING DRIVERS
COPS APPROPRIATION RISK: The 'AA' rating is based on the district's general creditworthiness and its obligation to make lease payments (subject to annual appropriation). The all-or-none feature of the master lease and the significant number of school facilities, which are subject to surrender in the event of non-appropriation, temper this risk.
SUPERIOR FINANCIAL PROFILE: Fund balance levels remain sound despite recent drawdowns. Conservative budgeting and adherence to prudent fiscal policies creates general fiscal stability and a return to balanced operations is expected within the next year or two.
ECONOMIC RECOVERY CONTINUES: The area economy has improved considerably over the past few years. Expanding employment, a recovering housing market and resumption of tax base growth characterize present economic conditions.
MANAGEABLE LONG-TERM OBLIGATIONS: Overall debt levels are moderately low and expected to remain so given the school's modest capital needs and its lack of plans for future debt issuance. Pension and other post-employment benefits (OPEB) liabilities do not limit financial flexibility.
DETERIORATION OF RESERVES: Continued depletion of district reserves below the district's minimum fund balance target could lead to negative rating action. The Stable Outlook reflects Fitch's expectations that this development is unlikely.
The district is coterminous with
HEALTHY RESERVE LEVELS MAINTAINED DESPITE OPERATING PRESSURES
The district's financial position remains healthy despite a series of fund balance drawdowns stemming from decreased property tax revenues and lower levels of state aid. Fund balance levels are maintained well above the district's prudent 7.5% unassigned fund balance to spending policy.
Finances also benefit from management's conservative budgeting practices as actual results invariably outperform the budget. Fiscal 2013 operations ended with a
Financial flexibility has been reduced somewhat in recent years as the district has engaged in extensive spending cuts to offset state funding reductions. Between fiscals 2008 and 2014, officials eliminated 650 positions or about 11% of headcount. As a result of these and other cost cutting measures, fiscal 2013 general fund expenditures were
The district budgeted a
Property tax receipts were significantly over budget as the district budgets conservatively assuming all taxpayers take advantage of the 4% early payment discount. In addition, the district also received
The fiscal 2015 budget benefits from a 7.8% increase in the district's tax base. Elevated property tax revenues partially offset increased costs for employee benefits and pass-through funding to charter schools. The modest projected use of fund balance would bring down unassigned general fund balance to
LOCAL ECONOMY CONTINUES TO RECOVER
The county is experiencing a sustained recovery from the past recession, which hit its economy particularly hard. Between 2006 and 2010, the county's employment base fell 14% while housing valuations shrunk by over 50%. Employment stabilized in 2011 and has since then consistently expanded.
Since 2012, housing values have been gradually rising.
The housing correction combined with tax reform beginning in fiscal 2008 had a severe impact on the county's tax base. Between fiscals 2008 and 2013, total assessed value (TAV) decreased by over
Preliminary values for fiscal 2015 are up an ample 7.8% from the prior year. Approximately
LOW-RISK DEBT PROFILE
Overall debt levels are moderately low (
Future capital needs center on replacement of HVAC systems, the building of permanent classroom wings to replace portable facilities and the construction of a technical center in the southern portion of the County. The district has received a
Employee retirement benefits do not stress the district's operations. Like other
COPS DEBT SERVICE
The district pays COPs debt service with revenue from its capital outlay millage, although all legally available revenues may be used for this purpose. The capital outlay millage can be levied up to 1.5 mills with three quarters of that levy available for the payment of debt service. To cover maximum annual debt service, the district requires only 0.59 mills of this levy. Coverage is expected to increase after fiscal 2015, as debt service is scheduled to decline by over
The master lease structure of the COPs is strong, requiring all-or-none appropriation. In the case of non-appropriation, the trustee is authorized to require the district to surrender use of all facilities under the master lease which include four elementary schools, two high schools and the
The series 2004 COPs fully mature after fiscal 2015, after which three elementary schools financed by those COPs will be released from the master lease. The remaining facilities under the master lease will still constitute a significant portion of the district's school capacity covering nearly 11% of the student population. No reserve fund is provided, which Fitch does not deem a concern given the district's elevated credit characteristics and very strong incentives to appropriate.
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
Most Popular Stories
- Desktop, Laptop Setups Still King
- Four DC Comics Properties Brought to TV Get Comic-Con Event
- UFC Fight Night Sees Robbie Lawler Win Unanimous Decision
- Plan to Simplify 2015 Health Renewals May Backfire
- 'Guardians of the Galaxy ' Sequel Slated for 2017
- Shania Twain's Vegas residency ending after 110 shows