LOS ANGELES — Berryessa Union School District, located in San Jose, Calif., received a ratings boost to AA-minus from A-plus on its long-term ratings and on the district's upcoming plans to issue $40 million in general obligation bonds.
The outlook is stable.
Berryessa, a K-8 school district, serves a community of approximately 45,000 homes in San Jose's affluent Silicon Valley and has almost 8,100 students enrolled.
The higher rating reflects the district's continued strong-to-very strong reserves, the renewal of its parcel tax, good financial management and its deep and diverse tax base, said Standard & Poor's credit analyst Kate Burroughs.
Voters recently renewed a parcel tax for $1.7 million annually through fiscal 2022, which is about 2.8% of general fund expenditures, according to Burroughs. Voters also approved a $77 million bond measure in November.
The GO bonds are backed by ad valorem property taxes. Bond proceeds will be used to repair, upgrade, acquire, construct, and equip certain district property and facilities, according to the S&P report.
"The stable outlook reflects our expectation that the district will maintain at least strong reserves, supported by its recently renewed parcel tax," Burroughs said. "If the district draws down its reserves further than its current plans, we could lower the rating."
The district has built up its reserves over the past four years, most recently at $11.3 million, or 18.7% of expenditures in fiscal 2014, according to the S&P report.
The school district has announced plans to draw down reserves - maintain them at a 10% 10 13% level - in order to restore some items cut during the recession including teacher's salaries, Burroughs said.
If the district's reliance on state funding were to decrease and enrollment were to stabilize, Burroughs said S&P could raise the rating, although analysts don't anticipate that happening over the two-year horizon of the outlook.