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MOODY'S ASSIGNS Aa3 RATING TO TRITON REGIONAL SCHOOL DISTRICT'S (MA) $20.6 MILLION GENERAL OBLIGATION REFUNDING BONDS OF 2011

01 Sep 2011

Primary & Secondary Education
MA

Moody's Rating

ISSUE

RATING

General Obligation Refunding Bonds of 2011

Aa3

  Sale Amount

$20,625,000

  Expected Sale Date

09/06/11

  Rating Description

General Obligation

 

Opinion

NEW YORK, Sep 1, 2011 -- Moody's Investors Service has assigned a Aa3 rating to Triton Regional School District's (MA) $20.625 million General Obligation Refunding Bonds of 2011. Moody's currently maintains an Aa3 long-term rating on the district. The bonds are being issued at a premium to refund $8.1 million Series of 1999 bonds and $14.2 million Series of 2001 bonds.

SUMMARY RATINGS RATIONALE

The rating reflects the district's stable financial position, its member towns' ample aggregate tax base with above average socioeconomic indices and a very manageable debt position. All of the district's bonds are secured by the district's general obligation unlimited tax pledge.

STRENGTHS:

-Member towns' large, wealthy tax bases

-Manageable debt burden with limited future borrowing plans

-Reduced reliance on reserve appropriations

CHALLENGES:

-Limited revenue raising flexibility

-Limited reserve levels

DETAILED CREDIT DISCUSSION

SATISFACTORY FINANCIAL POSITION EXPECTED TO REMAIN STABLE

After several years of structural imbalance, Moody's expects that the district's financial position will remain stable in the near term, despite its relatively narrow reserve levels. The district has consistently appropriated excess and deficiency funds as a means to balance annual operating budgets, however these appropriations were rarely replenished. In fiscal 2009, the district appropriated $335,000 of excess and deficiency (E&D) funds. Due to mid-year cuts in transportation aid and unfavorable budget to actual variances on investment income and School Choice expenditures, the district expended a total of $441,000 in E&D funds, dropping the certified E&D total to negative $100,000. Fiscal 2009 total general fund balance was $213,000 or a very narrow 0.5% of revenues, down from $932,000 or a healthier 2.6% of revenues in fiscal 2006.

The district finished fiscal 2010 with an operating surplus of $289,600, largely due to savings on instruction expenditures and the implementation of spending freezes on all non-operating expenditures. In response to mid-year state aid reductions, the district laid off 13 employees for a savings of approximately $300,000. The fiscal 2010 surplus augmented total general fund reserves to $565,929 (1.3% of revenues), and the certified excess and deficiency position to $562,000. Preliminary results for fiscal 2011 results indicate that the year ended on budget and management anticipates that excess and deficiency will remain at $562,000.

The 2012 budget is a modest 1.7% increase over the fiscal 2011 budget. Positively, the budget does not include any appropriation of excess and deficiency funds. Moody's believes that this will help the district prevent an additional decline in reserves and stabilize its financial position.

ABOVE AVERAGE GROWTH FOR SIZEABLE TAXBASE

The district serves the member towns of Rowley (G.O. rated Aa2), Newbury (G.O. rated Aa2), and Salisbury (G.O. rated Aa3) which are located on the North Shore of Massachusetts, roughly 30 miles north of Boston (G.O. rated Aaa/stable outlook). The combined $4 billion tax base has seen above average growth with a 5-year average annual change in full value of 4.7% since 2005. Wealth levels in the district are above the commonwealth medians, with per capita and median family incomes at 106.2% and 113.8% of the state, respectively.

MINIMAL DEBT BURDEN DUE TO COMMONWEALTH SCHOOL CONSTRUCTION GRANTS

Moody's believes that the district's debt position will remain manageable due to minimal future borrowing plans and an average debt burden. The district's 2010 debt burden was an average 0.6% of full value, however, when state reimbursements for school construction projects are factored in, the debt burden drops to a very manageable 0.1%. Principal amortization is well structured, with 100% being retired within 10 years. The district has no future debt plans. All of the district's debt is fixed rate and the district is not party to any derivative agreements.

WHAT COULD CHANGE THE RATING- UP:

-Increased reserve levels

-Increased revenue-raising flexibility

WHAT COULD DRIVE THE RATING- DOWN:

-Continued appropriation of excess and deficiency funds

-State aid or local assessment cuts, coupled with a failure to mitigate those cuts

-Failure to maintain structurally balanced operations

KEY STATISTICS

2000 Combined Population: 20,044

2010 Combined Equalized Valuation: $4.0 Billion

2010 Combined Equalized Value Per Capita: $190,720

Equalized Value Five Year Average Annual Growth (2006-2011): 4.7%

1999 District Per Capita Income (as % of MA and US): $27,568 (106.2% and 127.7%)

1999 District Median Family Income (as % of MA and US): $70,166 (113.8% and 140.2%)

Fiscal 2010 General Fund balance: $566,000 (1.3% of General Fund Revenues)

Fiscal 2010 Certified Excess and Deficiency Funds: $562,000 (1% of General Fund Revenues)

2010 Overall Debt Burden: 0.6%

2010 Adjusted Debt Burden: 0.1%

Principal Payout (10 years): 100%

General Obligation Unlimited Tax Long Term Debt Outstanding: $20.6 million

The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following: parties involved in the ratings and public information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a 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 Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

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

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's 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 www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Analysts

Valentina Clark
Analyst
Public Finance Group
Moody's Investors Service

Susan Kendall
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, Inc.
250 Greenwich Street
New York, NY 10007
USA

MOODY'S ASSIGNS Aa3 RATING TO TRITON REGIONAL SCHOOL DISTRICT'S (MA) $20.6 MILLION GENERAL OBLIGATION REFUNDING BONDS OF 2011
No Related Data.
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