Standard & Poor's Ratings Services said it raised its long-term rating and underlying rating on Huntington Beach City School District, Calif.'s previously issued general obligation bonds to AA-minus from A-plus.
The outlook is stable.
"The upgrade reflects our view of district's improved financial performance resulting in a strengthened available general fund balance that has exceeded 20% of expenditures over the last few audited fiscal years," said Standard & Poor's credit analyst Daniel Zuccarello.
The rating further reflects the district's strong and diverse local economy; good financial management policies; and low to moderate overall debt that is rapidly amortized.
Unlimited ad valorem taxes levied on taxable property within the district secure the GO bonds. The Orange county board of supervisors has the power and obligation to levy these taxes at the district's request for the bonds' repayment. The county is required to deposit such taxes, when collected, into the bonds' debt service fund.
The stable outlook reflects Standard & Poor's opinion of the district's consistent financial performance and maintenance of its very strong available reserves. The outlook also reflects expectation that management will continue to make necessary budgetary adjustments to maintain balanced operations and at least strong available reserves despite projected average daily attendance decreases. Therefore, the agency does not expect to change the rating over the two-year outlook horizon. However, to the extent that the district consistently relies on reserves for operational purposes, reducing available reserves and its overall financial flexibility, it could consider lowering the rating.
Huntington Beach City School District provides K-12 educational services to an estimated 83,300 residents in Orange County, within Huntington Beach, California. Huntington Beach is one of the leading commercial and industrial centers in Southern California, and is also a popular tourist destination. The district's access to the greater Los Angeles and Orange County employment centers contributes to, what the agency considers its very strong economic characteristics.
