Moody’s confirms excellent bond rating for Lowndes County School District

Lowndes Schools’ decrease of $4.1 million in annual bond payments after 2013 is more than the total $3.6 million in bonds Dublin Schools issued to pay for their megawatt of solar power. So Lowndes Schools could float bonds for solar panels at Lowndes High School like Dublin Schools did for Dubin High School. Or on the new Pine Grove Middle School, which already has some energy efficiency features. Either would decrease outgo in the future, thus evening up the financial structural balance and increasing reserve levels. The SPLOST mentioned by Moody’s is the educational ESPLOST, which passed by more than 4 to 1 in March 2011.

Moody’s PR 17 July 2013, Moody’s confirms Lowndes County School District, GA’s Aa3 GO rating,

$34.9 million in GO debt affected

New York, July 17, 2013 — Moody’s Investors Service has confirmed the Aa3 general obligation rating of Lowndes County School District, GA. The Aa3 rating affects $34.9 million in outstanding general obligation bonds. The bonds are secured by the district’s general obligation, unlimited tax pledge but are expected to be paid from proceeds of a one percent Special Purpose Local Option Sales Tax (SPLOST). The district has an additional $10 million in general obligation bonds not rated by Moody’s.

SUMMARY RATING RATIONALE

The confirmation of the Aa3 rating reflects the district’s sizeable and growing tax base, SPLOST support of debt service, modest debt burden, and rapid payout. The rating also incorporates the district’s below average socioeconomic indicators and recent trend of General Fund operating deficits. Excluding a slight 1.7% decline in fiscal year 2011, Lowndes County School District has consistently experienced growth in the $3.87 million tax base, which is expected to continue going forward. The base benefits from the institutional presence offered by Moody Air Force Base, Valdosta State University (A1/stable), and South Georgia Medical Center (A2/stable). The current SPLOST is authorized through September 2017 and should provide sufficient revenues to make debt service payments. In fiscal year 2012, SPLOST revenues were $12.4 million compared to debt service payments of $12.2 million. Following fiscal year 2013’s payment of $12.1 million, the district’s payments will decline to just under $8 million annually. Amortization is rapid with all debt fully matured by fiscal year 2018. The district does not have any plans to issue additional debt.

The district’s General Fund operations have been challenged as state aid has declined as has federal aid. Fiscal year 2012 marked the fourth consecutive year the district drew on General Fund reserves for operations, reducing the fund balance to $9.65 million or a satisfactory though below average 11.2% of revenues. District officials report another draw of about $3 million in fiscal year 2013 and have appropriated $3.4 million of fund balance for fiscal year 2014. The trend of structural imbalance and continued use of fund balance is a credit weakness. Future reviews will focus on the ability of the district to maintain adequate reserves.

STRENGTHS

  • Sizeable tax base that benefits from institutional presence
  • SPLOST revenues fully support debt service payments
  • Low indebtedness with rapid amortization

CHALLENGES

  • Recent trend of General Fund operating deficits
  • Below average socioeconomic indicators

WHAT COULD MAKE THE RATING GO — UP

  • Significant increases in assessed valuation and improved socioeconomic factors
  • Return to structurally balanced financial operations resulting in increased reserve levels

WHAT COULD MAKE THE RATING GO — DOWN

  • Substantial declines in assessed valuation
  • Continued operational deficits resulting in significant reductions in reserves

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was General Obligation Bonds Issued by US Local Governments published in April 2013. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Sarah Jensen
Associate Analyst 2
Public Finance Group
Moody’s Investors Service, Inc.
600 North Pearl Street
Suite 2165
Dallas, TX 75201
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

LaurenĀ EĀ Von Bargen
Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

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