In the course of routine surveillance, Fitch Ratings affirms the rating on the Cook County Community High School District Number 233 (Homewood - Flossmoor), Illinois' (the district) approximately $18 million in outstanding limited tax general obligation (GO) bonds at 'AA-'. The Rating Outlook is Stable.
The 'AA-' rating is based on the district's solid financial performance and strong community support for increasing recurring revenues. The rating further incorporates the district's above-average wealth and low direct debt levels with no plans for additional debt. Financial results have shown continued improvement since Fitch's last review in 2006, as expected. The key rating driver is the district's ability to retain financial flexibility due to its reliance on property taxes and expected moderation of tax base growth.
The district serves an affluent region of suburban Cook County, approximately 25 miles south of Chicago, including the villages of Flossmoor and Homewood and portions of Glenwood, Hazel Crest, Chicago Heights and Olympia Fields. Although the county's economic profile has weakened with the national recession, the local economy, residential in nature, remains steady. Tax base growth has stayed strong over the past five years, and equalized assessed value (EAV) grew 9.1% in the 2008 tax year, due primarily to the reassessment. The district expects the tax base to stay steady in the next two years and increase again in fiscal 2010. The property tax base is well diversified, as the 10 largest taxpayers hold just 8.7% of the district's total assessed valuation. Wealth levels in the district are above average, and median household income and per capita income in Flossmoor are both over 2 times the national averages (1999 numbers).
The district continues to increase general fund reserve levels. In fiscal 2008 (June 30 year-end), the cash-based unreserved general fund balance totaled $20.7 million or 64% of expenditures and transfers out, an increase from 41% of spending the previous year, reflecting the continued savings from the early retirement program and property tax rate increases. Revenue growth has been strong but is expected to moderate with slowing tax base growth. Expenses are predictable under the terms of the five-year labor agreements implemented in 2008 and management expects the general fund balance to continue to grow over the near term. The district maintains financial flexibility outside of general fund resources with a sizable working cash fund. The 2009 expiration of a tax increment financing district in the Village of Homewood will add approximately $200,000 annually to the district's revenues, and will also contribute a one-time $1.5 million payout in 2011.
The district's use of internal funds for its capital program results in a low direct debt burden equal to $1,908 per capita and 0.7% of full market value. Amortization is rapid, with 100% of outstanding debt repaid by 2016. The district intends to fund its minimal future capital needs through internal sources and does not anticipate issuing additional debt in the near future.
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Contacts:
Fitch Ratings
Dana N. Sodikoff, 312-368-3215, Chicago
Ann
Flynn, 212-908-9152, New York
or
Media Relations:
Cindy
Stoller, 212-908-0526, New York
Email: cindy.stoller@fitchratings.com
