Moody's Investors Service said it has upgraded the general obligation bond rating on Encinitas Union School District, Calif., to Aa1 from Aa2 in conjunction with the issuance of $14 million general obligation bonds election of 2010, Series 2015.
The Aa1 rating applies to $45.3 million in GO bonds, which includes the current offering and outstanding parity debt. Proceeds from the current offering will finance repairs and construction at district facilities. Planned upgrades include improvements intended to enhance buildings' sustainability with the addition of solar panels and water reuse capabilities.
The upgrade to Aa1 from Aa2 reflects the district's socioeconomic and financial resiliency with reserves and liquidity remaining stable throughout the recession.
Available general fund balance averaged close to a strong 30% over the past six years. The rating upgrade is further supported by the district's sizeable tax base that exceeds national median levels and has demonstrated recent acceleration in growth, strong socioeconomic profile and continued fiscal discipline with an adopted fund balance policy supporting the district's ability to maintain very healthy reserves.
The Aa1 rating incorporates the district's status as a basic aid district, significantly reducing its exposure to variations or risks associated with the state's fiscal profile. Additionally, the district's services are limited to providing only elementary education, serving students in grades kindergarten through six in nine elementary school.
Limited operational responsibilities, in combination with a slightly declining student population of 5,445 students, affords the district significant budgetary flexibility in meeting programmatic spending requirements.
The GO rating also reflects the strength of the voter-approved, unlimited property tax pledge securing the bonds and the well-established levy and collection history for the debt service levy.
The county rather than the district levies, collects, and disburses the district's property taxes, including the portion constitutionally restricted to debt service on general obligation bonds.
