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MOODY'S ASSIGNS Aa2 RATING TO SPACKENKILL UFSD'S (NY) $2.9 MILLION SCHOOL DISTRICT REFUNDING SERIAL BONDS, 2010

13 Oct 2010

AFFIRMATION AFFECTS $18.07 MILLION IN PARITY DEBT OUTSTANDING

Primary & Secondary Education
NY

Moody's Rating

ISSUE

RATING

General Obligation School District Refunding Serial Bonds 2010

Aa2

  Sale Amount

$2,950,000

  Expected Sale Date

10/14/10

  Rating Description

General Obligation

 

Opinion

NEW YORK, Oct 13, 2010 -- Moody's Investors Service has assigned an Aa2 rating to Spackenkill Union Free School District's (NY) $2.9 million School District Refunding Serial Bonds, 2010. At this time, Moody's has also affirmed the Aa2 rating on the district's $18.07 million in parity debt outstanding. The bonds are secured by an unlimited tax pledge and will be used to refund the school district's serial bonds Series 1999 and 2001. 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 is based on the district's well-maintained financial operations, low debt levels and a stable tax base dominated by IBM.

HEALTHY RESERVES BOLSTERED BY STABLE FINANCES

Moody's believes the district will maintain its healthy financial position given strong management practices and a solid track record of reserves approximating 21.5% of revenues over the last three years. The fiscal 2009 General Fund balance equaled $8.9 million (25.2% of General Fund revenues). Management projects that fiscal 2010 will end with a General Fund balance of $10.04 million and another surplus through the conservative budgeting of expenditures. Property taxes comprise the main source of revenue, accounting for 75.1% of revenues in fiscal 2009. As is typical of New York school districts, the undesignated reserve levels are narrower, at 6.4% of General Fund revenues in fiscal 2009.

MODERATELY SIZED TAX BASE ON THE HUDSON RIVER; IBM CONCENTRATION

Moody's expects that the district's moderate $1.2 billion tax base will remain vulnerable to tax appeals from IBM (senior unsecured debt rated A1), the district's largest taxpayer; however we believe that the district has a strong track record of managing this risk, including the maintenance of a $4.9 million tax certiorari reserve. IBM, which accounts for 8.6% of assessed value and employs 5,500 employees, manufactures mainframe computers at its facility located in the district. The district is wholly contained in the Town of Poughkeepsie (rated Aa3). Wealth levels are well-above state and country medians and the healthy full value per capita of $143,504 reflects, in part, the IBM presence.

LOW DEBT LEVELS WITH AVERAGE PAYOUT

Moody's anticipates that the district's overall debt burden (1.7% of full value) will remain below-average, given the absence of future borrowing plans, average amortization of principal (68.2% within ten years) and the low level of direct debt (0.9% of full value). When adjusting the overall debt burden for state building aid, the debt burden is lowered to just 0.5%. The district does not have any variable rate debt outstanding and is not party to any derivative agreements.

What would make the rating change - UP

--Material improvement in the district's tax base and wealth characteristics to levels more consistent with higher rating categories

What would make the rating change - DOWN

-- Protracted structural budget imbalance

-- Depletion of General Fund balance and other available reserves

-- Increased leveraging of the district's tax base to level inconsistent with current rating category

- Deterioration of the district's tax base

KEY STATISTICS

2000 Population: 8,763

2009 Full valuation: $1.2 billion

Full value per capita: $143,504

Overall debt burden: 1.7%

Adjusted debt burden: 0.5%

2009 General Fund balance: $8.8 million (25.2% of General Fund revenues)

2000 Per Capita Income as a % of State: 126.6%

1999 Median Family Income as a % of State: 137.2%

Outstanding Parity Debt: $20.97 million

The principal methodology used in rating Spackenkill Union Free School District, NY 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, public information, confidential and proprietary Moody's Investors Service's 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

Tiphany J. Lee
Analyst
Public Finance Group
Moody's Investors Service

Robert Weber
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 SPACKENKILL UFSD'S (NY) $2.9 MILLION SCHOOL DISTRICT REFUNDING SERIAL BONDS, 2010
No Related Data.
© 2020 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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