LOS ANGELES-- Fitch Ratings upgraded San Francisco Community College District, Calif.'s general obligation bonds to A from BBB-plus March 20, and revised the outlook to stable from negative based on possible restoration of its accreditation.
Fitch had said in a January report that it deemed restoration of its accreditation status on Jan. 14 positive, but did not change its rating or outlook at that point.
The district has 85,000 students enrolled in 11 locations.
The upgrade and revised rating outlook reflects material improvements in the district's accreditation status and increased stability of its operations. In January 2015 the Western Association of Schools and Colleges' Accrediting Commission for Community and Junior Colleges (ACCJC) granted the district restoration status, providing two additional years to regain full accreditation. As part of the restoration process the district will face a new review by the ACCJC in January 2017, at which point it will need to demonstrate its full compliance with accreditation standards, or again face the possibility of termination.
"The district continues to implement administrative and financial reforms in response to deficiencies cited by ACCJC," Fitch said. "Progress will be required to insure the district's long-term success, but reforms achieved to date provide a strong foundation for such efforts."
State legislation enacted in mid-2014 that stabilizes funding despite recent enrollment declines is helping the district to gain traction, according to Fitch. Fitch also said its' rating considers the state's key role in supporting district reforms and stabilizing operations, as demonstrated by the appointment of a special trustee and adoption of district-specific legislation.
San Francisco's "exceptionally strong economy and resilient tax base" also bolsters the property taxes that support the district, analysts said.
"Wealth and income levels remain high, employment growth is robust, and taxable assessed values have experienced growth." Fitch analysts said.
