Standard & Poor’s removed the capital outlay certificates issued by 23 South Dakota school districts from negative credit watch, raising six ratings, affirming 10, and lowering seven.
The certificates were originally rated under the Standard & Poor’s general obligation criteria. The new ratings reflect the fact that the certificates do not carry a full faith and credit pledge of the districts, analysts said in a release.
The certificates are secured by the districts’ limited capital outlay tax. The schools have no legal obligation to dip into general funds to pay off the debt if the capital outlay tax is insufficient.
South Dakota allows its school districts to levy a direct general property tax that is subject to the limitation that the tax does not exceed $3 per $1,000 of assessed valuation in the district, analysts said.
Districts with outstanding capital outlay certificates are required to levy a tax sufficient to cover debt-service payments,.
The rating actions are: Bon Homme School District No. 4-2 raised to AA-minus from A; Britton-Hecla School District No. 45-4 lowered to A from A-plus; Brookings School District No. 5-1 affirmed at AA-minus; Custer School District affirmed at A-plus; Flandreau School District No. 50-3 lowered to A from AA-minus; Freeman School District No. 33-1 lowered to A-minus from AA-minus; Garretson School District No. 49-4 lowered to A from AA; Hamlin School District No. 28-3 raised to AA-minus from A-plus; Harding County School District No. 31-1 affirmed at A-minus; Highmore-Harrold School District No. 34-2 lowered to A from A-plus; Hill City School District No. 51-2 affirmed at A-plus; Huron School District No. 2-2 raised to AA-minus from A-plus; Lennox School District No. 41-4 lowered to A from A-plus; Meade School District No. 46-1 affirmed at AA-minus; Milbank School District No. 25-4 affirmed at A-plus; Mitchell School District 17-2 raised to AA-minus from A-plus; Sioux Valley School District 5-5 affirmed at AA-minus; Spearfish School District No 40-2 affirmed at AA-minus; Tea Area School District No. 41-5 raised to AA from A-plus; Tri-Valley School District No. 49-6 lowered to A from AA; Watertown School District No 14-4 raised to AA from A-plus; Wolsey-Wessington School District 2-6 affirmed at A-plus; and Yankton School District No. 63-3 affirmed at A.