Moody's Investors Service has upgraded Mineral Springs School District No. 3, Ark.'s underlying general obligation bond rating to A2 from A3.
Moody's concurrently downgrades the district's enhanced rating to A2 from A1. The bonds are secured by the district's general obligation limited tax pledge, supported by proceeds of a continuing debt service tax levy.
The rating upgrade reflects the rapid expansion of the district's tax base, as measured by total full value, due to a new coal-fired power plant becoming operational in 2012.
As a result of the expansion, the district is now among the wealthiest in terms of local revenue per pupil after being one of the poorest. The unaudited results for fiscal 2014 show an available fund balance increase almost seven times the prior year, which could put upward pressure on the rating if managed properly.
Although the district is under new management, the rating takes into account the severely weak fiscal management in prior years that led to classification on the state's fiscal distress list and state intervention in 2013. The district's below average wealth levels and modest debt burden are also reflected in the rating.
