In the course of routine surveillance, Fitch Ratings affirms the 'AA' rating on San Rafael City Elementary School District, CA's $107.9 million outstanding general obligation (GO) bonds. The Rating Outlook is revised to Stable from Negative.
The Outlook revision is primarily a result of the renewal of the parcel tax and the return to solid unreserved fund balance levels evidencing financial stabilization. The 'AA' rating reflects the district's sound financial operations, prudent management practices, including expenditure reductions to offset state revenue cuts, increasing enrollment and low debt levels. Fitch views the district's maintenance of adequate reserve levels as crucial to retaining its credit quality, given the current state funding constraints.
The district is located in the economically stable Marin County, where wealth levels are very high, unemployment levels trend well below state and national averages and mortgage foreclosure rates are among the lowest in the nation. The district serves the city of San Rafael, small portions of Larkspur and the town of Ross, and some unincorporated areas of the county. Assessed valuation gains have been sound, including a 6.6% increase during fiscal 2009. Enrollment continues to grow rapidly, with management projecting steady growth over the next few years.
The district's financial position has strengthened due to strong management practices. During fiscal 2009, the district significantly reduced expenditures and did not fill vacant positions; layoffs were implemented for fiscal 2010. In addition, operations are assisted by a voter-approved parcel tax. Unreserved fund balance levels have increased, with estimated results for fiscal 2009 showing a $2.7 million unreserved level, equal to 7.8% of spending. During the past three years, the district's enrollment and fund balance growth have exceeded their 2006 projections. 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 low at $2,558 per capita and 1.6% of market value including overlapping debt. Amortization is below average with 36.4% repaid in 10 years.
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Contacts:
Fitch Ratings
Jonathan Bodner, 212-908-0803, New York
Amy
Doppelt, 415-732-5612, San Francisco
or
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Cindy
Stoller, 212-908-0526, New York
Email: cindy.stoller@fitchratings.com