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MOODY'S ASSIGNS Aa1 RATING TO BEXLEY CITY SCHOOL DISTRICT'S (OH) $2.4 MILLION GENERAL OBLIGATION REFUNDING BONDS, SERIES 2010

22 Sep 2010

Aa1 RATING APPLIES TO $29.3 MILLION OF POST-SALE GOULT DEBT

Primary & Secondary Education
OH

Moody's Rating

ISSUE

RATING

General Obligation Refunding Bonds, Series 2010

Aa1

  Sale Amount

$2,418,782

  Expected Sale Date

09/23/10

  Rating Description

General Obligation Unlimited Tax

 

Opinion

NEW YORK, Sep 22, 2010 -- Moody's Investors Service has assigned a Aa1 rating to Bexley City School District's (OH) $2.4 million General Obligation Refunding Bonds, Series 2010. Concurrently, Moody's has affirmed the outstanding Aa1 rating affecting $29.3 million of post-sale general obligation debt.

RATINGS RATIONALE

The bonds, which are secured by a general obligation unlimited tax pledge, are being issued for the purpose of currently refunding the district's Series 2001 General Obligation Bonds for a net present value savings of $110,000, or 4.5% of the par amount. Assignment of the Aa1 rating reflects the district's moderately sized and mature tax base favorably located within the City of Columbus (Aaa/stable outlook) in Franklin County (Aaa/stable outlook) aided by strong socioeconomic indicators; sound financial position supported by healthy reserves; and manageable debt profile with no additional near-term borrowing plans.

MODERATELY SIZED MATURE TAX BASE FAVORABLY LOCATED WITHIN COLUMBUS

We expect the city's tax base will remain sound given its stable and mature economic base, favorable location within the City of Columbus, and strong socioeconomic indicators. Located in Franklin County, the district is completely surrounded by Columbus. While the City of Bexley (Aa1) experienced moderate commercial growth and redevelopment along the downtown corridor a few years ago, district management notes that recent tax base growth has been in the form of additions and expansions to existing residential property. The district's moderately sized $1.3 billion tax base continues to experience modest residential growth, as evidenced by a 3.3% average annual rate of growth since 2005. Full valuation per capita is very healthy at $99,747, reflecting the high quality of the district's residential base. The district's largely mature residential areas include a variety of price points ranging from several million dollar homes to more moderately priced areas; the city is also home to both the Governor's mansion as well as the residence of the president of The Ohio State University evidencing both the quality of development as well as the city's role within the Columbus metro region. Resident income levels far exceed state norms with per capita and median family incomes equivalent to 178.3% and 167% of national medians, respectively.

FINANCIAL POSITION STRENGTHENED BY YEAR-OVER-YEAR OPERATING SURPLUSES; BUDGETED DRAWDOWNS EXPECTED

We expect the district's financial operations to remain sound in the near term due to strong fiscal oversight and income tax collections which have led to the development of healthy General Fund reserves. The district maintained a General Fund balance of $8.7 million, or 33% of operating revenues on a GAAP Basis, at the conclusion of fiscal 2005. In fiscal 2004, the district successfully passed a 0.75% income tax levy. The additional revenue stream, in conjunction with conservative budgeting practices, has strengthened the district's financial profile. Recent years depict a series of General Fund operating surpluses which have bolstered reserves significantly to $20.9 million, or a very strong 68% of revenues (GAAP basis) at fiscal year-end 2009. On a cash basis, the district maintained a $17.2 million carryover, or a strong 60.1% of receipts at the conclusion of fiscal 2009. With the successful passing of the income tax levy, management made a commitment not to approach voters for new money before to 2009. The recent year-over-year development of reserves was implemented as a means of addressing this longer levy cycle. Property taxes represent the district's largest revenue stream at 58% of 2009 operating revenues. While the district historically has a very strong levy approval passage rate, the income tax revenue stream (16.4% of revenues) mitigates potential fiscal challenges that are associated with Ohio school district levy cycles.

Unaudited figures for fiscal 2010 depict a budgeted operating deficit totaling $445,000. The expected draw on reserves brings the district's cash carryover to $16.7 million, or a strong 56% of receipts. Management significantly scaled back revenue expectations and notes that preliminary figures were close to budget. Historically, the district has under expended appropriations, and in 2010 the district's personnel costs came in 2% under budget, reflecting the conservative budgetary expectations of management. Additionally, management froze capital and equipment purchases for an expected savings of $750,000. Looking ahead to fiscal 2011, management has budgeted for a planned draw on reserves totaling $2.7 million. The expected draw would bring the district's cash carryover to $14 million, or a still strong 48% of receipts. The budgeted figures incorporated essentially flat property and income tax revenue expectations. Management expects to place a 6.5 mill current expense levy on the November 2010 ballot. The effort is expected to generate $3 million in property tax revenue on an annual basis. Management has outlined a plan to draw down cash reserves to approximately $11 million (or an estimated 38.4% of fiscal 2009 receipts) over the next three years. While the district currently maintains cash on hand equivalent to 80-plus days of operations, management aims to bring the figure closer to 40 days in accordance with Ohio GFOA recommendations. With the promise of a five-year levy absence being fulfilled by the district, the budgeted draw downs in conjunction with the November ballot initiative will serve as a transition to a more regular levy cycle. Though financial narrowing is expected, we believe the district's conservative budgeting and strong fiscal oversight will allow for the maintenance of ample reserve levels.

MANAGEABLE DEBT PROFILE WITH NO FUTURE BORROWING PLANS

We expect the district's debt burden will remain manageable, given a modest direct debt ratio and a satisfactory rate of principal retirement. The city's overall debt burden is moderate at 2.5% (2.2% net direct debt). The rate of principal retirement is average, but satisfactory, with 60.4% of obligations repaid in ten years. Officials have no additional plans to issue further debt in the foreseeable future. All of the district's debt is fixed rate, and the district is not party to any interest rate swap agreements.

KEY STATISTICS

Population: 13,180

2010 full valuation: $1.3 billion

Full Value per Capita: $99,747

Median Family Income as a % of State: 167.1%

Per Capita Income as a % of State: 178.3%

Fiscal 2009 General Fund GAAP balance: $20.9 million (56.1% of General Fund revenues)

Fiscal 2009 General Fund cash balance $17.2 million (60.1% of cash receipts)

Debt Burden: 2.5% (direct 2.2%)

Principal Payout (10-years): 60.4%

Post-Sale General Obligation debt outstanding: $29.3 million

The principal methodology used in rating Bexley City School District, OH was General Obligation Bonds Issued by U.S. Local Governments rating methodology published in October 2009. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information.

Moody's Investors Service considers the quality of information available on the credit satisfactory for the purposes of assigning a credit rating.

MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Mark G. Lazarus
Analyst
Public Finance Group
Moody's Investors Service

Henrietta Chang
Backup Analyst
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S ASSIGNS Aa1 RATING TO BEXLEY CITY SCHOOL DISTRICT'S (OH) $2.4 MILLION GENERAL OBLIGATION REFUNDING BONDS, SERIES 2010
No Related Data.
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