BRADENTON, Fla. — Moody's Investors Service upgraded the Charleston County School District, S.C.'s outstanding general obligation debt to Aa1 from Aa2.
Moody's also upgraded to Aa2 from Aa3 the district's outstanding installment purchase revenue bonds.
The action affects $210.8 million of GO bonds and $576.9 million of installment purchase bonds outstanding as of June 30, 2013, according to the district's audit.
Moody's said the outlook is positive in a May 22 report.
The upgrade reflects the district's recently improved reserve levels, which have benefited from formal fiscal policies and conservative management, said analyst Lauren Von Bargen. "The upgrade also incorporates the district's stable tax base that realized notable growth in recent years, despite the economic downturn," she said.
The positive outlook reflects the expectation that the district's financial position will remain strong despite continued enrollment growth and related capital needs "due to management's demonstrated ability to grow reserves without a tax rate increase throughout the recession," she said.
The district's adopted fund balance policy calls for an unassigned balance of at least 5% of the budget.
Despite significant state aid cuts in recent years and no property tax rate increase since fiscal 2009, the district reported surpluses in four of the last five years, increasing the fund balance to $69.2 million in fiscal 2013 from $20.8 million in fiscal 2009, Moody's said.
The fiscal 2013 unassigned fund balance was $44.5 million or a "sound" 12.1% of revenues.
"The school district's above-average debt burden is manageable, given anticipated growth in its sizeable tax base," Von Bargen said. "The district's direct and overall debt burdens are above average at 1.3% and 2.5% of full valuation, respectively."
County voters will be asked to renew a sales tax this fall and, if passed, the district expects to fund a $450 million capital plan through December 2016 without the use of long-term financing, said Moody's.
The district shares the boundaries of Charleston County, where full market value has grown at an average annual rate of 2.8% in the last five years to $62 billion as of fiscal 2014. Unemployment, at 4.4% as of March 2014, is below the state's 5.4% unemployment rate.
The local economy benefits from ongoing development as major manufacturers move into and expand operations in Charleston County, including Boeing Co., which recently completed construction of a new $750 million facility.
