Fitch Ratings Tuesday downgraded to A from A-plus $114 million of Indian River County School Board’s outstanding certificates of participation. The rating outlook is stable.
The downgrade reflected weakened reserve levels, a sharp increase in unemployment, and a high foreclosure rate, Fitch said. “The A rating continues to reflect other solid underpinnings of the credit, including sound lease provisions, the essentiality of leased school building assets, adequate reserve levels, low debt levels, and moderate capital needs,” said a report by Fitch analyst Michael Rinaldi.
“The district has not been able to implement expenditure controls or cost-saving measures commensurate with the decline in state funding and local tax revenue the last several years to stave off an appreciable reduction in fund balance,” he wrote.
Unaudited results for fiscal 2009 show a $5 million net deficit, which would lower the unreserved general fund balance to $4.1 million, or 3% of total spending. The 2010 budget is balanced without the use of additional fund balance, Rinaldi said, noting that spending was reduced across the board by 10%, or approximately $14.3 million, from the prior year budget and included eliminating 112 positions.
The district received $9 million in stimulus funds through fiscal 2011, which lessened the severity of budget cuts, and it has additional financial flexibility with some of the approximately $39 million in unreserved capital improvement fund balance.