Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
New Issue:

MOODY'S ASSIGNS Aa2 TO CHAMBERSBURG AREA SCHOOL DISTRICT'S (PA) $10.4 MILLION G.O. BONDS, SERIES OF 2011

09 Jun 2011

THE Aa2 RATING APPLIES TO $151 MILLION IN RATED G.O. DEBT OUTSTANDING, POST REFUNDING

Primary & Secondary Education
PA

Moody's Rating

ISSUE

RATING

General Obligation Bonds, Series 2011

Aa2

  Sale Amount

$10,430,000

  Expected Sale Date

06/10/11

  Rating Description

General Obligation

 

Opinion

NEW YORK, Jun 9, 2011 -- Moody's Investors Service has assigned a Aa2 to the underlying rating of the Chambersburg Area School District's (PA) $10.4 million in General Obligation Bonds, Series of 2011. The affirmation affects $151 million in outstanding long-term general obligation debt.

SUMMARY RATING RATIONALE

The Series 2011 bonds are secured by a general obligation limited tax pledge. Approximately $106 million of outstanding debt is secured by a general obligation unlimited tax pledge as they are exempt from the Special Session Act 1 property tax limitations, the balance of the district's debt is secured by a general obligation limited tax pledge. Proceeds from the current issue will finance the construction of a new career magnet school.

The Aa2 underlying rating reflects a large, relatively stable tax base experiencing modest growth, and a manageable debt position. The rating also reflects the district's satisfactory financial performance with adequate reserve levels and strong liquidity support held outside of the General Fund.

STRENGTHS

-Large and stable tax base

-Conservative management reflected in stable financial operations

-Reserves outside of General Fund operations

CHALLENGES

-Declining General Fund financial reserves

-Potential state aid declines

-Growing expenditure pressures, particularly those related to employee salary and benefits

DETAILED CREDIT DISCUSSION

SATISFACTORY FINANCIAL OPERATIONS; SUPPORTED BY ADDITIONAL RESERVES HELD OUTSIDE OF GENERAL FUND

The district's financial operations are expected to remain sound despite reductions in General Fund balances due to management's relatively conservative budgeting techniques; additional reserves held outside of the General Fund augment district's financial flexibility. From fiscal 2004 through fiscal 2009 Chambersburg has reduced their General Fund reserves by nearly 50%, to a more narrow $2.8 million or 2.9% of revenue from $5.4 million or 8% of revenue, mostly due to various capital projects, partially financed through pay-go capital, requiring significant transfers to the Capital Reserve Fund. However, financial operations resulted in a moderately sized surplus in fiscal 2010 with another expected for fiscal 2011. The district gains additional flexibility from a Capital Reserve Fund and a Medical Insurance Fund which drives the district's satisfactory financial operations. While the Medical Insurance Fund has grown through conservatively budgeting transfers from the General Fund, the Capital Reserve Fund has experienced declines, to $3.3 million in fiscal 2010 from $7.2 million in fiscal 2006, due to ongoing new construction of school buildings and a winding down of the districts major projects. Together with the General Fund, these three reserves make up $12.57 million, a sound 12.1% of General Fund revenues. Although the Capital Reserve Fund is restricted for use on projects related to capital maintenance or debt service and the Medical Insurance Fund is restricted to use on future medical insurance premiums and neither can be transferred to the General Fund for general operations, these funds provide significant budgetary flexibility.

The district's operating surplus of $1.25 million in fiscal 2010, increased the General Fund balance to $4.1 million, or an adequate 3.9% of General Fund revenues. The surplus was primarily driven by conservative budgeting of revenues including only a partial budgeting inclusion of the total $6 million federal ARRA stimulus funds and positive budgetary variance in property tax collections. Notably, the district transferred $1.45 million to a Medical Insurance Reserve Fund to offset rapidly rising premiums in future fiscal years and $750,000 to the Capital Reserve Fund which will minimize the need for future debt issuance, without these transfers, the district's operating surplus would have been much larger. The district's largest sources of revenues are local taxes (63%), followed by state aid (31%) and federal aid (6%) (fiscal 2010).

Fiscal 2011 expenditures (budget to budget) increased by 5.9% balanced by a 5.5% total tax rate increase. Management anticipates ending fiscal 2011 with a $1 million operating surplus after fully replenishing the $2.1 million of reserves originally appropriated, again driven by conservative budgeting of revenues and expenditures and the realization of a $380,000 sale of an elementary school, an amount that will subsequently be transferred to the Capital Reserve Fund. Net of a transfer to the Medical Insurance Fund, operations are expected to include a $1.1 million transfer to the medical insurance fund, (total fund balance expected to be $5.2 million). Management closed the budget gap by implementing expenditure cuts, primarily through an estimated 40 staff reductions, through attrition and retirement in fiscal 2011. Staff reductions over the last three years, are projected to save the district more than $5 million of expenditures annually.

The district is still in the process of structuring their final fiscal 2012 budget, and are working to offset an estimated $3.7 million state aid cut and a loss of ARRA stimulus funds. Currently, the district anticipates appropriating approximately $1.1 million of fund balance to balance the budget and will implement further staff reductions coupled with an estimated 3.5% millage rate increase. Similar to other districts, Chambersburg may be challenged to fully offset various expenditure pressures, including pensions and health care increases. However, Moody's believes that the district's financial position will remain satisfactory as management intends to maintain General Fund reserves as current levels supported by the budgetary flexibility related to reserves held outside of the General Fund.

LARGE TAX BASE EXPERIENCING STEADY POPULATION GROWTH

The district's $5.3 billion tax base experienced modest growth over the last decade although recent declines are driven by the national economy. From 2000 to 2010, the districts population has grown to 66,240 from 55,856, an 18.6% increase, as new residents, including those from Maryland (G.O. rated Aaa) and Harrisburg, PA, are reportedly attracted to the relatively affordable real estate and low property taxes. Over the last several years, tax appeals have been driven by various commercial and residential development but are not expected to have a significant impact on the district's tax base. The district has seen average growth in taxable values, averaging 3.5% annually since 2005. Full valuation has grown at a stronger annual rate of 4.6% during the same period, reflecting strong market appreciation and new construction; however, the last three fiscal years have experienced an 11.9% decline in tax base due to the sluggish national real estate market. Both commercial and residential development is expected to continue as land in this traditionally-agricultural district remains abundant. Located in Franklin County close to the Maryland border, the district benefits from its location along the Interstate-81 corridor, a major thoroughfare that continues to spur commercial and light industrial development. Tax collections are satisfactory, exceeding 97%, while the district continues to budget a more conservative 95%. Wealth and income levels approximate state medians (98.5%) and full value per capita slightly exceeds the state median at $80,096.

The district's largest taxpayer, a nursing home/retirement community, continues to appeal its assessed valuation (starting in 1998) and requested exemption from real estate taxes. While the district is opposing the taxpayer's efforts to obtain a full exemption through the courts, the maximum financial exposure is approximately $1.5 million and if a judgment should be decided against the district it would likely be paid out of general operating funds, an amount which is not currently reserved against. In addition, the nursing home/retirement community comprises 2% of the total base or about $500,000 in annual property taxes. Should the nursing home prevail, the impairment to financial operations could impact credit quality.

MANAGEABLE DEBT POSITION WITH SLOW PAYOUT

The district's average 2.8% direct debt burden will remain manageable given an absence of additional debt plans and the availability of Capital Reserve Fund ($3.3 million at fiscal year-end 2010). The district's overall debt burden, inclusive of overlapping Franklin County debt, is average at 3.8% of full value and remains at an average 3.5% after adjusting for school building aid. Amortization of principal is slow, with 29.6% retired within 10 years, as a result of the district recent borrowings to finance long life assets, including three elementary schools and a high school. Debt service currently makes up a modest 8.8% of expenditures and is not expected to increase substantially given the structure of debt amortization.

WHAT COULD MAKE THE RATING GO UP

-Considerable tax base growth

-Growth in General Fund reserve levels

WHAT COULD MAKE THE RATING GO DOWN

-Significant draw downs on financial reserves

-Sustained increases in debt levels

-Significant reductions in state aid outside of current projections

KEY STATISTICS

2000 Population: 55,856

2010 Population: 66,240

2010 Full valuation: $5.3 billion

2010 Full value per capita: $80,096

Direct debt burden: 2.8%

Overall debt burden (adjusted for building aid): 3.8% (3.5%)

Payout of principal (10 years): 29.6%

Fiscal 2010 General Fund balance: $4.1 million (3.9% of General Fund revenues)

1999 Per capita income (as % of state): $20,572 (98.5%)

1999 Median family income (as % of state): $47,354 (96.3%)

Post-sale parity debt outstanding: $151 million (including $45 million limited tax debt)

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments, published in October 2009.

REGULATORY DISCLOSURES

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

Vito Galluccio
Analyst
Public Finance Group
Moody's Investors Service

Jessica A. Lamendola
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 TO CHAMBERSBURG AREA SCHOOL DISTRICT'S (PA) $10.4 MILLION G.O. BONDS, SERIES OF 2011
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.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. 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 or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​
Moodys.com