NEW YORK - Standard & Poor's Ratings Services said it raised its underlying rating (SPUR) on Chartiers Valley School District, Pa.'s general obligation (GO) debt one notch to AA-minus from A-plus based on the district's good management practices and consistently sound financial performance. The outlook is stable.
The rating further reflects the district's: primarily residential property tax base with participation in the deep, diverse Pittsburgh employment base; good income levels, coupled with strong market value per capita; and moderate debt burden with limited additional capital needs.
The stable outlook reflects the district's current financial position, evidenced by its record of general fund surpluses and management's willingness to address liabilities through a variety of contingency funds. The outlook further reflects the district's participation in the Pittsburgh metropolitan statistical area.
"We believe that with limited additional capital needs, the district's debt burden should remain manageable," said Standard & Poor's credit analyst Linda Yip.
The district continues to maintain a sound financial performance and position, even after taking into account transfers into the capital improvement fund and other contingency funds. The district closed fiscal 2009 with an ending general fund balance of $1.5 million, or an adequate 3.4% of expenditures: roughly $981,000, or an adequate 2.2%, of which management classifies as unreserved.
The school district board maintains a policy that requires the maintenance of a general fund balance at 3% of previous-year general fund expenditures. The district's practice of reserving capital and employee benefit and retirement costs somewhat mitigates the adequate fund balance level. Pursuant to the board-adopted policy, officials can transfer 80% of general fund balance over the 3% requirement into the capital improvement fund, which totaled $17.7 million at fiscal year-end 2009, to address ongoing capital needs.
Standard & Poor's has revised Chartiers Valley School District's Financial Management Assessment (FMA) to "good" from "standard," reflecting a clarification of the district's reserve policy. The assessment of "good" indicates financial practices exist in most areas but that governance officials might not formalize or regularly monitor all of them.
Assessed valuation has increased by an average of 1.3% annually over the past five fiscal years to $1.7 billion in fiscal 2010. The corresponding market value is $60,264 per capita, a level Standard & Poor's considers strong.
Standard & Poor's views the district's debt burden as a moderate $1,983 per capita, or 3.4% of market value. Amortization of debt is faster than average with officials planning to retire 64% of principal over the next 10 years and 100% by 2024.
