Standard & Poor's Ratings Services said it raised its underlying rating on Perth Amboy Board of Education, N.J.'s series 2009 certificates of participation two notches to A from BBB-plus.
The outlook is stable.
"We base the upgrade on what we view as the district's improved financial position due to higher-than-budgeted state aid receipts, resulting from a statewide educational funding equity lawsuit," said Standard & Poor's credit analyst Apple Lo. "Management represented that the district would be receiving an additional $30 million in state aid each year," Lo added.
Standard & Poor's also affirmed its AA-minus enhanced program rating, with a negative outlook, on the school district's series 2011 bonds based on the additional security provided by the New Jersey Fund for the Support of Free Public Schools.
The rating also reflects the district's: strong security provided by the ground-lease agreement and reserve account; access to the deep and diverse New York City and Philadelphia metropolitan statistical areas; very strong financial position when total reserves are considered, along with strong liquidity; and low direct debt burden with rapid amortization.
Offsetting these strengths are the district's above-average unemployment rates and below-average per capita income levels.
The stable outlook reflects the district's very strong financial position, which would continue in the future with support from the additional state aid receipts and limited capital needs. Given the district's limited local economy, the rating agency does not expect to raise the rating within the outlook's two-year horizon. Although unlikely within the outlook framework, it could lower the rating if the financial position were to decline significantly.
Perth Amboy Board of Education is coterminous with Perth Amboy, with an estimated population of 51,390 in Middlesex County. It is halfway between New York City and Philadelphia. The district has a mix of residential, commercial, and industrial properties. Its location on the New Jersey shore has made it attractive for redevelopment in the past several years.
