NEW YORK--(BUSINESS WIRE)--In the course of routine surveillance, Fitch Ratings affirms the 'A+' rating on $15.7 million outstanding Moreno Valley Unified School District, CA general obligation (GO) bonds. The Rating Outlook is revised to Negative from Stable.
The Outlook revision to Negative is primarily a result of declining general fund balance levels in the context of falling revenues and significant state budget cuts. The 'A+' GO rating reflects the district's weakened but adequate financial position, low debt burden, and management's demonstrated ability to reduce expenditures to mitigate significant declines in state revenue. Fitch views the district's maintenance of adequate reserve levels as crucial to maintaining its credit quality.
The district is located in El Dorado County, where wealth levels are above average, unemployment rates trend along state and national averages, and home foreclosures to date have been relatively low. The district's assessed valuation growth slowed in 2010 to a low 1% and is expected to slow further. Enrollment continues to decline, with management projecting future decreases over the next four years, contributing to further state revenue reductions.
Financial operations remain strained but adequate due to strong management practices. Despite layoffs, the district's unreserved general fund balance declined from $3.7 million or 7.2% of spending at fiscal year end 2008 to an estimated $1.7 million or 4.7% of spending at fiscal year end 2009. For fiscal 2010, management plans to further draw down the general fund balance to offset state funding cuts. The district is projecting the unreserved general fund balance in fiscal 2010 to decline to only 3.7% of spending, compared to 11.8% in fiscal 2006. Management has prudently set aside reserves outside of the general fund and is prepared to further reduce expenditures. Given expected state funding reductions, expenditure control will be crucial to sustaining the current reserve levels.
Debt levels, including the full accreted value of the capital appreciation bonds, remain low at $2,432 per capita and 1.6% of market value including overlapping debt. Amortization is below-average with 38.4% repaid in 10 years.
The district is located approximately 200 miles northeast from the City and County of San Francisco and 100 miles east of Sacramento, in El Dorado County, consisting of five elementary schools, one middle school, one continuation high school, one comprehensive high school, and a traditional learning center. The majority of district residents reside in the City of South Lake Tahoe.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Tahoe School Bond De-Rated
| Local News |
