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MOODY'S ASSIGNS Aa2 RATING TO RSD #15'S (SOUTHBURY & MIDDLEBURY)(CT) $18.2 MILLION G.O. REFUNDING BONDS, ISSUE OF 2010

04 Oct 2010

Aa2 AFFIRMATION AFFECTS $23.5 MILLION IN DEBT OUTSTANDING, INCLUDING THIS ISSUE

Primary & Secondary Education
CT

Moody's Rating

ISSUE

RATING

General Obligation Refunding Bonds, Issue of 2010

Aa2

  Sale Amount

$18,225,000

  Expected Sale Date

10/07/10

  Rating Description

General Obligation

 

Opinion

NEW YORK, Oct 4, 2010 -- Moody's Investors Service has assigned a Aa2 rating to Regional School District #15's (Southbury, Middlebury) (CT) $18.2 million General Obligation Refunding Bonds, Issue of 2010. Concurrently, Moody's has also affirmed the Aa2 rating on the district's $23.5 million of post-refunding outstanding parity debt. The bonds are secured by a general obligation unlimited pledge of the district and the member towns. The refunding is expected to generate a net present value savings in excess of 5% of refunded principal, without extending the maturity of the debt.

RATINGS RATIONALE

The Aa2 rating reflects the long-term credit quality of the district's participants, as well as the district's satisfactory financial operations, and low debt burden.

DISTRICT'S FINANCIAL OPERATIONS DEPEND UPON FINANCIAL STABILITY OF MEMBER TOWNS

The district's operations and debt service are funded by assessments levied by member towns, which are assessed in proportion to the number of students attending the district and paid to the district monthly. The percent of students enrolled in the district for fiscal 2011, by town, are as follows: Southbury (G.O. rating Aa2; 70%) & Middlebury (G.O. rating Aa2; 30%). The district is required by statute to use all of its Undesignated General Fund balance at the end of each fiscal year to reduce the subsequent year's net expenses. As such, the district does not maintain a consistent General Fund balance.

District officials report that monthly assessments from the two member towns have historically been received on time and in full. The district's financial operations are overwhelmingly supported by assessments (96% of 2009 revenues), while state and federal aid represents a low 3% of revenues. The district ended fiscal 2009 with a $70,000 operating surplus, bringing General Fund balance to $820,179 or 1.4% of revenues, the entire amount of which was reserved for encumbrances ($741,331) and for the member towns ($78,847). The district maintains additional financial flexibility outside of the General Fund with fiscal 2009 year-end balances of $973,775 in its Capital Non-Recurring Fund and $693,000 in its Sick and Severance Fund. The balance in each fund has accumulated through General Fund transfers, including a total $1.2 million transfer to the funds in fiscal 2009. The district anticipates ending fiscal 2010 with a modest operating surplus of approximately $72,000. During the fiscal year the district benefited from lower than budgeted energy costs due to a recently implemented energy management program as well as expenditure savings following a transition to health savings accounts for district employees. The fiscal 2011 budget represents a 2.1% increase over the prior year. The district's budget passed on its first vote, indicative of the strong support the system receives from its member towns. The budget was balanced, in part, with an absence of cost of living increases negotiates with the district's teachers.

Looking ahead, the credit quality of the member towns and the district's ability to maintain structural balance will be important considerations in future rating reviews.

LARGELY RESIDENTIAL TAX BASE; TAX BASE GROWTH EXPECTED TO REMAIN STABLE

Moody's anticipates growth of the district's tax base to remain slow over the near term reflecting continued weakness in the regional housing market and recessionary economic conditions. The district is Located 6 miles west of Waterbury (G.O. rating A1/stable outlook) and 19 miles northwest of New Haven (G.O rating A1). For the last five years, combined net taxable grand list growth has averaged 6.5% annually, inclusive of property revaluations in Middlebury and Southbury, in 2008 and 2009, respectively. The towns are overwhelmingly residential in nature with above average wealth levels. Full value per capita is a solid $209,859.

DEBT BURDEN EXPECTED TO REMAIN MANAGEABLE

Moody's expects the district's debt burden (currently 0.5% of full value) to remain manageable given the absence of large scale future borrowing plans and favorable payout of principal, with 75.6% retired within 10 years. Further, the district's debt service expenditures have remained relatively stable over the last several fiscal years and represented 5.9% of expenses in fiscal 2009. The district's debt profile consists entirely of fixed-rate borrowing and the district has not entered into any derivative agreements.

What would make the rating change - UP

-- Improvement in the credit quality of the member towns

What would make the rating change - DOWN

-- Protracted structural budget imbalance

-- Deterioration of the credit quality of the member towns

KEY STATISTICS

2000 Population: 25,018

District 2009 Net Equalized Grand List: $5.2 billion

District Net Equalized Grand List Per Capita: $209,859

District Per Capita Income as % of CT, % of US: 113.6%, 151.4%

District Median Family Income as % of CT, % of US: 123.9%, 162.2%

District Overall debt burden: 0.7%

District Direct debt: 0.5%

District Payout of principal (10 years): 75.6%

District Fiscal 2009 General Fund balance: $820,000 (1.4% of revenues)

Post-closing Long-term Parity Debt Outstanding: $25.3 million

The principal methodology used in rating Regional School District 15 (Southbury & Middlebury), CT 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, confidential and proprietary Moody's Investors Service's information, confidential and proprietary Moody's Analytics' 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

Conor McEachern
Analyst
Public Finance Group
Moody's Investors Service

Josellyn Yousef
Backup Analyst
Public Finance Group
Moody's Investors Service

Geordie Thompson
Senior Credit Officer
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 Aa2 RATING TO RSD #15'S (SOUTHBURY & MIDDLEBURY)(CT) $18.2 MILLION G.O. REFUNDING BONDS, ISSUE OF 2010
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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