Bangkok--20 Nov--Standard & Poor's
Standard & Poor's Ratings Services raised its underlying rating (SPUR) to 'A+' from 'A' on Riverbank Unified School District, Calif.'s outstanding general obligation (GO) bonds. At the same time, Standard & Poor's raised its SPUR to 'A' from 'A-' on the district's outstanding certificates of participation (COPs). Finally, Standard & Poor's assigned its 'A' long-term rating to the district's series 2009A and B COPs and qualified school construction bonds (QSCBs). The QSCBs provide a tax credit to investors in lieu of a regular interest coupon, thereby providing for a federal subsidy to the district for the cost of this debt. Standard & Poor's credit ratings do not address the tax credit component of this issue.
"The raised ratings are based on our view of the district's maintenance of strong fund balances over the past five fiscal years," said Standard & Poor's credit analyst Li Yang.
The district's finances have been what we consider strong over the past five fiscal years and reserves have ranged between 11% and 19% of expenditures. The district's reserves totaled roughly $4.7 million, or what we consider a strong 17.8% of expenditures, based on unaudited actual numbers for fiscal 2009. The district experienced cuts in state funding in fiscal 2010 and in response reduced expenditures through staff reductions by attrition and layoffs. Combined with federal stimulus money received, the district projects that fiscal 2010 reserves will end at roughly 11.4% of expenditures. Further strengthening the district's financial position are funds kept in a special reserve fund that can be used for general fund expenditures, according to management. Based on the fiscal 2010 budget, the district will have roughly $441,000, or 1.7% of expenditures.
The district's enrollment has declined over the past two fiscal years to 2,516 in fiscal 2009, not including the district's dependent charter school enrollment. However, management indicates that enrollment is expected to stabilize in the near term, with possible increases due to the addition of 65 new residential units within the district.
The district is located in California's Central Valley in Stanislaus County, about 10 miles northeast of Modesto and 95 miles east of San Francisco.
RELATED RESEARCH
USPF Criteria: "GO Debt," Oct. 12, 2006
USPF Criteria: "Appropriation-Backed Obligations," June 13, 2007
Complete ratings information is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Li H Yang, San Francisco 1-415-371-5024
Gabriel Petek, CFA, San Francisco (1) 415-371-5042