In the course of routine surveillance, Fitch Ratings affirms its 'A+' rating on Fowler Unified School District (USD), California's (the district) $9.4 million in outstanding unlimited tax (ULT) general obligation bonds (GOs). The Rating Outlook is Stable.
The rating reflects the district's strong financial management reflected in a growing general fund balance, continued growth in assessed valuation despite an aggregate contraction in Fresno County, where Fowler is located, low debt levels and progress towards funding its retiree healthcare liability. The rating further reflects the relatively poor economic climate of the Fresno metropolitan area, as well as continuing turmoil in local housing and employment markets. While fund balance levels are currently strong, they may be vulnerable to decline over the near term. The key rating driver is maintenance of adequate general fund balance in the face of considerable local economic distress.
The district's audited financial position has remained stable since Fitch's last review in 2005, with unreserved general fund balances up from $1.7 million (11.5% of spending in fiscal 2004) to $2.0 million (10.5%) in fiscal 2008. The fiscal 2010 budget projects a significantly strengthened unreserved balance of $3.0 million (17.4% of spending, on a budgetary basis), due to careful financial management and a significant general fund surplus forecast for fiscal 2009.
Fowler Unified School District is located in Fresno County, California, encompassing the city of Fowler as well as unincorporated sections of the county. The wider metropolitan area economy is performing poorly compared with the rest of the state, with individual poverty and unemployment rates over 50% higher than the California aggregate. Median household income is 23% below the state average. Fitch data also suggests ongoing distress in the local housing market, with evidence that the impact of poor mortgage underwriting trends has yet to be fully absorbed.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Contacts:
Fitch Ratings, New York
Tom Cowell, 212-908-9130
Douglas
Offerman, 212-908-1889
or
Media Relations:
Cindy Stoller,
212-908-0526
Email: cindy.stoller@fitchratings.com
