In the course of routine surveillance, Fitch Ratings affirms Lamont School District, California's $3.4 million outstanding general obligation (GO) bonds at 'A'. The Rating Outlook is Stable.
The 'A' rating reflects the district's strong financial operations and fund balance levels, conservative management practices, and moderate debt levels, balanced by a narrow and highly concentrated economy and low wealth levels. The rating further reflects management's demonstrated ability to reduce expenditures to mitigate significant declines in state revenue. Fitch views the district's maintenance of adequate reserve levels as crucial to retaining its credit quality, given the state funding constraints.
The district is located in economically distressed Kern County, where wealth levels are very low, unemployment rates trend above state and national averages and home foreclosures are among the highest in the nation. Economic weakness is further evidenced by a 4.4% decline in assessed values for fiscal 2010. The district is located southeast of Bakersfield and serves the unincorporated community of Lamont. The regional economy is dominated by oil and agriculture. Enrollment is expected to remain stable over the next few years.
The district's financial position remains sound, evidencing strong management practices. During fiscal 2009, the district significantly reduced expenditures and did not fill vacant positions. Based on preliminary results, the district will end fiscal 2009 with a $2.6 million unreserved fund balance, a strong 10.2% of spending. During the past three years, the district's total fund balance growth has exceeded their 2006 projections. The district's fiscal 2010 budget projects an increased unreserved general fund balance as it continues to prudently reduce expenditures to mitigate the projected continued decline in state funding; layoffs were implemented for fiscal 2010. Given expected state funding reductions, expenditure control will be crucial to sustaining the current reserve levels.
Debt levels, including the full accreted value of the capital appreciation bonds, remain moderate at $892 per capita and 3.6% of market value including overlapping debt. Amortization is slow with 30.3% repaid in 10 years.
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Contacts:
Fitch Ratings
Jonathan Bodner, +1-212-908-0803 (New York)
Alan
Gibson, +1-415-732-7577 (San Francisco)
Media Relations
Cindy
Stoller, +1-212-908-0526 (New York)
cindy.stoller@fitchratings.com
