Fitch Ratings last week upgraded the Hernando County School Board’s $143.4 million of outstanding certificates of participation to A-minus from BBB-plus. The rating agency also raised the school district’s general obligation credit, and its $800,000 of outstanding GOs, to A from A-minus.
Fitch attached a stable rating outlook to the district, which is located on the west coast of Florida north of Tampa. Like all of the state’s 67 school districts, the Hernando system is coterminous with the county it is located in.
“The upgrade to the district’s GO and COP ratings reflects the district’s overall improved credit characteristics, including satisfactory financial operations with multiple years of operating surpluses with increased reserve levels and moderating capital needs,” said a report by analyst Rachel Barkley.
Barkley said the district’s limited economy and below-average wealth levels are incorporated into the ratings.
The district’s financial operations have stabilized over the past few years with operating surpluses in six out of the last seven audited fiscal years. In fiscal 2009, it made a policy decision to increase the fund balance to provide a buffer for any necessary draw-downs in fiscal 2010, Barkley said, noting that unaudited results for fiscal 2009 showed an increase in the unreserved fund balance to 8.1%.
Capital needs for the district have moderated in recent years as enrollment projections have declined. The proposed capital improvement plan for 2020-2014 totals $135 million with no additional debt issuance currently planned.