Palm Bay Charter Negative

Standard & Poor’s Tuesday revised the rating outlook to negative from stable on approximately $12 million of outstanding revenue bonds issued for the Palm Bay Academy charter school.

The agency affirmed its BB-minus rating on the bonds, which were issued on behalf of the academy by the Florida Development Finance Corp.

The outlook change is due to operating pressures on financial operations related to decreasing enrollment levels, and the fact that the school expects it may need to use some trustee-held reserves to make debt service payments next year, said a report by Standard & Poor’s analyst Jane Hudson Ridley.

With debt service expected to reach near maximum levels in the next few years, additional pressure likely will be placed on the school to add and maintain enrollment, Ridley said, noting that the uncertainty of state school funding adds to this pressure.

Palm Bay Academy was established in 1998 with an initial three-year charter granted by the Brevard County Board of Education. The charter was renewed for a 10-year term in 2002 and runs through the 2012 school year.

Palm Bay’s focus is an academically rigorous alternative to the local public schools, and test scores demonstrate significant strengths in student achievement, Ridley’s report said. Enrollment has grown to 505 K-8 students in the current school year. The academy had 100 K-3 students in the 1999 school year, its first in operation.

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