Fitch Ratings has affirmed the AA rating on the affluent Scottsdale Unified School District No. 48’s approximately $51.2 million of outstanding general obligation bonds despite slipping enrollment, the agency said. The outlook is stable.

“The AA rating reflects Scottsdale Unified School District No. 48’s good financial operations evidenced by sound reserves, moderate debt levels with manageable capital needs, and stable assessed valuation growth,” analysts wrote. “The district benefits from a strong and diverse local economy with above-average wealth levels and low unemployment rates relative to state and national levels. However, credit concerns include continual enrollment declines and the district’s vulnerability to statewide budgetary pressures that may reduce state aid.”

Enrollment declines have averaged 1% annually between fall 2003 and fall 2007, primarily due to increased competition from charter and private schools, Fitch noted. Luxury residential developments have forced families to move away from the area in search of affordable housing.

In the event of state aid reductions, the district will reduce expenditures in salaries, transportation, and classroom materials. The district has also implemented a soft freeze on hiring and expects staff reductions as a result of attrition.

“The stable outlook reflects Fitch’s expectation that the district’s prudent financial planning, reinforced by conservative budgeting and spending policies, will help the district weather enrollment declines and maintain a stable financial position,” Fitch wrote.

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