San Francisco Unified School District, CA GO Bond Outlook Revised To Positive On Formal OPEB Funding Plan

Stocks and Financial Services Press Releases Wednesday March 15, 2017 08:58
SAN FRANCISCO--15 Mar--S&P Global Ratings

SAN FRANCISCO (S&P Global Ratings) March 14, 2017--S&P Global Ratings revised its outlook to positive from stable and affirmed its 'AA-' long-term rating on San Francisco Unified School District, Calif.'s outstanding general obligation (GO) bonds. At the same time, S&P Global Ratings assigned its 'AA-' long-term rating to the district's election of 2016, series A GO bonds and 2017 GO refunding bonds.

"The revised outlook reflects our view of the district's sustained strengthening of available reserves, virtually stable enrollment trend despite rising housing costs, and progress in its efforts to address its other postemployment benefits, or OPEBs, liability with its proposal to create an irrevocable trust for its OPEB," said S&P Global Ratings credit analyst Benjamin Geare.

"The outlook revision also takes into account the change in our view of the district's financial management policies and practices." The rating further reflects our view of the district's: Underlying economic base that is central to the very large and diverse San Francisco Bay Area;Very strong to extremely strong wealth and income indicators and robust employment growth in its service area; andMultiple revenue streams, which is a situation that is not common among other districts in the state, reflecting a pattern of strong voter support.

The positive outlook reflects our opinion that there is a one-in-three chance that we could raise the rating within our two-year outlook horizon.

If the district is able to maintain available reserves near the 2016 level relative to expenditures and move forward with a more formal plan to fund its OPEB liability, including establishing an irrevocable trust and committing to a funding plan, we could raise the rating.

Alternately, we could also raise our rating if the district secures additional sources of revenue flexibility, resulting in a significant reduction to its reliance on state funding, by, for example, achieving and maintaining basic-aid status. However, if the district spends down balances as shown in its forecast to levels we consider adequate to good, we could revise the outlook back to stable.

Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at for further information.

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All ratings affected by this rating action can be found on the S&P Global Ratings' public website at Use the Ratings search box located in the left column

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