Standard & Poor's Ratings Services said it raised its long-term rating on Pratt County, Kan.'s general obligation debt one notch, to AA-minus from A-plus.
At the same time, Standard & Poor's assigned its AA-minus rating to the Pratt County Public Building Commission, Kan.'s series 2015 refunding revenue bonds, which are supported by the county. The outlook is stable on all ratings.
"The upgrade reflects our view of the county's sustained very strong budgetary flexibility," said Standard & Poor's credit analyst Oscar Padilla. On a cash basis of accounting, reserves have averaged 264% of operating expenditures in the last three fiscal years (audited). While the county projects a drop in reserves in fiscal 2015 and 2016, the ratio should remain above 140% of operating expenditures.
Annual rental payments, payable by the county to the public building commission under the lease but not subject to annual renewal by the county, secure the bonds and constitute an unconditional obligation of the county.
Because the bonds are an unconditional obligation of the county, it is responsible for levying taxes, if necessary, to pay debt service on the bonds.
The county's obligation to make payments under the lease is not subject to annual appropriation or termination during the lease term and therefore, the agency has not notched these bonds off the implied GO debt rating.
In practice, the county's voter-authorized 0.75% county sales tax has supported the lease rental payments as well as the lease payments by Pratt Regional Medical Center, which is owned by the county but operated by the Pratt Regional Medical Center Cooperation. Bond proceeds will refund a portion of commission's debt for debt service savings.
