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Rating Action:

Moody's assigns Aa1 UND/Aa1 ENH to Columbia School District MO's GOs, Series 2020C

02 Dec 2020

Assigns Aa2 to Refunding COPs, Series 2021

New York, December 02, 2020 -- Moody's Investors Service has assigned Aa1 underlying and Aa1 enhanced ratings to Columbia School District, MO's $4.7 million General Obligation Refunding Bonds (Missouri Direct Deposit Program), Series 2020C. Concurrently, Moody's assigned a Aa2 rating to the district's $6.1 million Refunding Certificates of Participation (The School District of Columbia, Boone County, State of Missouri), Series 2021. Moody's maintains the Aa1 rating on the district's outstanding general obligation unlimited tax (GOULT) debt and Aa2 rating on appropriation debt issued for essential purposes. Post sale, the district will have $319 million in general obligation debt and $6.1 million in lease appropriation debt outstanding. The outlook is stable.

RATINGS RATIONALE

The Aa1 GOULT rating reflects the district's large and stable tax base, anchored by the University of Missouri at Columbia, and a history of stable financial performance with strong reserve levels due to prudent fiscal management. These attributes provide flexibility to adapt to an altered operating environment resulting from the coronavirus pandemic. The rating also incorporates the district's elevated, though manageable, debt burden with plans for additional borrowing in the near-term, and a high pension liability, which is expected to increase over the medium term.

The Aa1 enhanced rating is notched from the State of Missouri's Aaa GO rating. The Missouri School District Direct Deposit Program rating has a stable outlook in keeping with the outlook on the state's GO debt. The enhanced Aa1 rating on the Series 2020C bonds is based on the Missouri School District Direct Deposit Program's programmatic rating and the district's current state aid allocation, which exceeds the requirement of 1.5 times maximum annual debt service (MADS) due on all district debt secured by the program.

The Aa2 rating on the district's lease appropriation debt represents a one-notch distinction from the Aa1 GOULT ratings and reflects the annual risk of non-appropriation and the more essential nature of the pledged or leased asset (district facilities).

RATING OUTLOOK

The stable outlook reflects the district's demonstrated ability to manage increased pension contributions while balancing its budget and achieving budgeted results. The outlook also reflects the stability of the tax base and enrollment which will continue to support management's ability to reasonably predict revenues and expenditures.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS

- Significant increase in the tax base

- Material reduction in debt and pension burdens

- Sustained increase in available reserves

- Upgrade of the Missouri Direct Deposit Program (enhanced)

- Upgrade of the district's GOULT rating (lease appropriation)

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS

- Significant tax base contraction

- Trend of structural imbalances leading to an erosion of reserves beyond planned draws

- Increased debt or pension burden or an inability to manage rising pension costs

- Downgrade of the Missouri Direct Deposit Program (enhanced)

- Downgrade of the district's GOULT rating (lease appropriation)

LEGAL SECURITY

The district's GOULT bonds are payable from ad valorem taxes which may be levied without limitation as to rate or amount upon all the taxable tangible property, real and personal, within the territorial limits of the district. The full faith, credit and resources of the district are irrevocably pledged to repayment of the bonds. The Series 2020, 2020B, and 2020C bonds are additionally secured by interception of state aid due to the district to pay debt service pursuant to the Missouri School District Direct Deposit Program. The district remains obligated to pay debt service on the bonds if the amounts of intercepted state aid is insufficient.

The Series 2021 certificates are payable solely from the Basic Rent to be paid by the district under the lease. The leased property consists of the 6 acre site on which the district's administration building sits. The lease to the Trustee extends to October 2056 (which is 20 years after the latest scheduled payments required by the lease), unless terminated sooner due to the district making all payments as required by the lease. The district's obligation to make Basic Rent payments and other payments under the lease is subject to annual appropriation by the Board of Education. The district has also covenanted to pay the Basic Rent payments to the Trustee no later than 5 business days prior to the payment due date, so long as the lease is in effect. Post refunding, the Series 2021 certificates will be the district's only lease appropriation debt outstanding.

USE OF PROCEEDS

Proceeds of the Series 2020C GOULT bonds will refund certain maturities of the district's General Obligation Refunding and Improvement Bonds, Series 2013. Proceeds of the Series 2021 COPs will refund all of the outstanding Certificates of Participation (School District Administration Building Project), Series 2011A. Each refunding is for anticipated interest savings with no extension of maturity.

PROFILE

The district is located in central Missouri in Boone County and encompasses 303 square miles with 34 schools. The state's fifth largest district serves the population of the City of Columbia and the surrounding area. Fall 2021 enrollment was approximately 18,200 students.

METHODOLOGY

The principal methodology used in the general obligation rating was US Local Government General Obligation Debt published in July 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1230443. The principal methodology used in the enhanced rating was State Aid Intercept Programs and Financings published in December 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1067422. The principal methodology used in the lease rating was Lease, Appropriation, Moral Obligation and Comparable Debt of US State and Local Governments published in July 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1102364. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security 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 certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain 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.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

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.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Kenneth Surgenor
Lead Analyst
Regional PFG Dallas
Moody's Investors Service, Inc.
Plaza Of The Americas
600 North Pearl St. Suite 2165
Dallas 75201
US
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Christopher Coviello
Additional Contact
Regional PFG Northeast
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2021 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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