LOS ANGELES — Idaho's triple-A rated enhancement lessens the impact of a one-notch downgrade to a southeastern Idaho school district.
Moody's Investors Service downgraded Bingham County School District 55 in Blackfoot to A2 from A1, affecting $6.1 million in rated general obligation debt. The district also has $0.78 million in privately placed debt not rated by Moody's.
Moody's said it maintains an Aaa enhanced rating on the district's rated debt, because the debt is backed by the state's sales taxes revenues through the Idaho State Bond Guaranty and Credit Enhancement Programs on voter-approved school bonds.
Additionally, the state's Public School Permanent Endowment Fund is required to provide funds for payment of districts' debt service when funds are not available from other state sources. The Aaa rating for the enhancement program is a result of the state pledge, ample sales tax revenue coverage of guaranteed debt service payments, strong state oversight of local school districts, and the programs' mechanics, according to the report.
The downgrade of the district's underlying rating primarily reflects the district's weakened financial position as a result of poor financial management oversight and failure to make budget corrections during the school year. Analysts also cited the district's small and rural tax base, below average socio-economic indicators, and declining enrollment trend.
The district's strengths included a manageable debt burden that amortizes rapidly and a stable tax base.
A trend of substantial improvement in the district's financial position, significant improvement of socio-economic indicators and significant tax base growth would be required for a rating upgrade. A flip of all those factors could result in an additional downgrade.