Fitch Affirms Seminole County Schools, Florida COPs; Outlook Stable
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The following is from Fitch Ratings on
Fitch Ratings affirms the following ratings of
--
--Implied unlimited tax general obligation bonds at 'AA'.
The Rating Outlook is Stable.
Security
The district's COPs are secured by lease payments made to the trustee and pursuant to a master lease purchase agreement. Lease payments are payable from legally available funds of the district (subject to annual appropriation by the
In the event of non-appropriation, all leases will terminate, and the district would, at the trustee's option, have to surrender all lease-purchased projects for the benefit of owners of the COPs which financed or refinanced such projects.
Key Rating Drivers
Voter Support for Schools: District financial position is adequate, marked by strong expenditure control. Recent passage of tax referendums enhances financial flexibility. One time reserve use in fiscal 2014 narrows financial reserves but operating stability is expected in fiscal 2015.
Low Long Term Liabilities: Key debt ratios are very low and are expected to remain so given moderate capital needs and absence of borrowing plans. Pension and other long term liabilities are a low percentage of spending.
Strengthening Economic Profile: Recovery from the downturn is evidenced by employment growth and tax base expansion.
COPs Appropriation Risk: The one-notch distinction between the implied ULTGO and COPs rating incorporates risk to annual appropriation. Tempering this risk is the all-or-none appropriation feature of the master lease, the sizable number of schools under the master lease and the essential nature of leased assets that are subject to surrender in the event of non-appropriation.
Rating Sensitivities
Weakening of Operating Reserves: The rating is sensitive to the district's ability to maintain structural balance. Failure to maintain reserve levels in fiscal 2015 could pressure the rating.
Credit Profile
The school district, which is coterminous with
Sound Financial Position
District financial position has weathered the economic downturn well with moderate draws on reserves. The district tax base turned the corner in fiscal 2014. Together with voter approvals for added real property tax and sales tax revenue, this helps support the expectation of continued sound financial position.
The district incurred operating deficits of
Fiscal 2013 results were
One Time Reserve Use in Fiscal 2014; Balance Expected in 2015
District officials project the fiscal 2014 general fund balance to decline by
Voters approved a one mill increase in property taxes for operations for four years, the collection of which began in fiscal 2014. The
Voters also approved, by a 52 percent margin, a ten-year
Satisfactory Revenues for COPs Debt Service
The district has historically paid COPs debt service with revenue from its 1.5 mills for capital outlay, although all legally available revenues are available for this purpose. Three-fourths (1.12 mills) of the 1.5 mills levy is available for COPs debt service. In fiscal 2013 the total capital millage collected was
The master lease structure on the district's COPs is strong, requiring an all-or-none appropriation. In the case of non- appropriation, the trustee is authorized to require the district to surrender use of all facilities under the master lease, which is approximately 30 percent of the district's total facilities. Fitch considers this a strong incentive to appropriate.
Low Long Term Obligations
Overall debt levels are very low at 1.0 percent of market value and
The district's fiscal 2015-2025 capital improvement program totals a moderate
Pension obligations are limited to the district's participation in the statewide multiple-employer pension plan, a plan which is fairly well funded. For fiscal 2013, the district's annual contribution totaled
The district offers an implicit subsidy for other post- employment benefits (OPEB) as required by state law. The district funds the liability on a pay-as-you-go basis with a fiscal 2013 contribution of
Recent Economic and Tax Base Strengthening
In addition to job growth, recovery is also evident in the district's real property tax base. Taxable assessed value fell almost 24 percent from peak to trough, but is now showing sustained improvement with 2.7 percent and 5.7 percent growth in fiscal years 2013 and 2014, respectively.
Additional information is available at 'fitchratings.com'.
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