Moody's Investor's Service said it has upgraded Wyandanch Union Free School District, N.Y.'s underlying rating to Baa3 from Ba1.
Concurrently, Moody's said it has upgraded the district's enhanced rating to Baa2 from Baa3. This action affects $2 million in outstanding general obligation debt.
The upgrade to Baa3 reflects the district's improved, but still narrow, financial position evidenced by four years of operating surpluses, modest tax base with value decline, and average debt burden.
The Baa2 enhanced rating is based upon the additional security provisions offered by New York State's school debt intercept program.
The enhancement program, contained in Section 99-B of the State Finance law, authorizes the state to withhold state aid in order to make bond payments in the event of default by a school district.
Following default, and subsequent notification by a bondholder of a missed payment, the state comptroller is directed to investigate and verify the principal and interest amounts in arrears. The comptroller will then deduct sufficient funds to pay these amounts from succeeding allotments of state aid.