New York, April 13, 2016 -- Summary Rating Rationale
Moody's Investors Service has affirmed the Aa3 issuer rating on the North Dakota Department of Public Instruction's School District Enhancement Program. The outlooks on the programmatic rating and the enhanced ratings of participating school districts have also been revised to negative, in conjunction with the negative outlook assigned to the state's issuer rating (Aa1 negative). The outlooks on the underlying ratings of participating school districts remain unchanged. A list of affected school districts is below.
The Aa3 is two notches off the state's Aa1 negative issuer rating, based on satisfactory revenue availability, as well as sound notification timing, mechanics and state support for essential public education services that are typical for a current year intercept program. The second notch is related to the somewhat weak documentation of timing and mechanics, which are spelled out in administrative documents rather than state legislation, and the relatively new, untested nature of the program.
The outlook on the programmatic rating is negative, reflecting the negative outlook on the state. At the financing level, the outlooks on all enhanced ratings of participating school districts are also negative, consistent with the programmatic rating outlook.
Factors that Could Lead to an Upgrade
An upgrade of the state's rating
Inclusion of timing and notification details in authorizing legislation
A demonstration of successful application of the intercept program
Factors that Could Lead to a Downgrade
A downgrade in the states issuer rating
An intercept payment made by the state after the debt service date
The programmatic issuer rating and the financing level enhanced ratings are based on the state's commitment to intercept available revenues and pay debt service when notified of the school district's potential debt service deficiency.
Use of Proceeds
North Dakota is the 47th largest state by population in the United States. Its 2014 gross domestic product ranks 47th among the states.
School District Enhanced Ratings
Enhanced Ratings of the Following Districts are Currently Aa3 negative:
Bottineau Public School District 1
Carrington Public School District 49
Cavalier Public School District 6
Dickinson Public School District 1
Drayton Public School District 19
Dunseith Public School District 1
Fargo Public School District 1
Flasher Public School District 39
Fort Yates Public School District 4
Glenburn Public School District 26
Grand Forks Public School District 1
Grenora Public School District 99
Hankinson Public School District 8
Hazen Public School District 3
Hillsboro Public School District 9
Jamestown Public School District 1
Kenmare Public School District 28
Killdeer Public School District 16
Kulm Public School District 7
Leeds Public School District 6
Lewis and Clark Pub. School Dist. No. 161
Mandan Public School District 1
McKenzie County Public School District 1
Menoken Public School District 33
Minnewaukan Public School District 5
Minot Public School District 1
Minto Public School District 20
Mohall-Lansford-Sherwood Public S.D. 1
Nedrose Public School District 4
Nesson Public School District 2
New England Public School District 9
New Salem-Almont Public School Dist. 49
Northern Cass Public School District 97
Northwood Public S.D. North 129
Oakes Public School District 41
Park River Area Public School District 8
Powers Lake Public School District 27
Richland County Public School District 44
Rugby Public School District 5
South Prairie Public School District 70
Stanley Public School District 2
Surrey Public School District 41
Thompson Public School District 61
Tioga Public School District 15
Turtle Lake-Mercer Public School Dist 72
Valley City Public School District 2
Wahpeton Public School District 37
Ward County Public S.D. 7 (United)
Westhope Public School District 17
Williston Public School District 1
The principal methodology used in this rating was State Aid Intercept Programs and Financings: Pre and Post Default published in July 2013. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.
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Moody's affirms Aa3 on ND Dept. of Public Instruction SD Enhancement Prgm.; outlook revised to negative
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007