NEW YORK Standard & Poor's Ratings Services said it has raised its underlying rating (SPUR) on Earlimart Elementary School District, Calif.'s certificates of participation to BBB from BBB-minus, based on sustained strong financial operations and reserve levels, coupled with steady tax base growth. The outlook is stable.
The rating reflects a legal structure that includes the district's covenant to budget and appropriate lease payments, and the district's underlying general creditworthiness. General credit characteristics of the district include an agriculture-based local economy, with high unemployment rates and below-average income levels; strong general fund balances; and moderate debt burden.
"The stable outlook reflects the anticipation of continued moderate growth in the district's enrollment and tax base, and our expectation that the district will maintain its sound financial operations and position," said Standard & Poor's credit analyst Jonathan Jacobson.
The district's financial performance is solid, having posted operating surpluses in four of the past five fiscal years. A net surplus of $988,000 in fiscal 2004 boosted the ending total general fund balance to $8.7 million, or a very high 65% of operating expenditures. Unreserved general fund balances have grown steadily, to $6.8 million (57%) at fiscal 2004 year-end from $2.7 million (29%) in 2000. Estimated actual results for fiscal 2005 indicate another operating surplus.
The certificates are secured by lease rental payments from the district, as lessee, to the Earlimart Elementary School District Financing Corp., a nonprofit public benefit corporation, as lessor. The leased assets consist of two of the district's three schools.
Earlimart Elementary School District provides K-8 educational services to a population of approximately 9,100 in southern Tulare County. The district operates three schools in an 84-square-mile area that includes the unincorporated community of Earlimart, located 45 miles north of Bakersfield.
