Albert Gallatin Area School District, PA GO Rating Lowered To #A-# On Ongoing Structural Imbalance, Financial Decline

Stocks and Financial Services Press Releases Thursday September 28, 2017 08:51
NEW YORK--28 Sep--S&P Global Ratings

NEW YORK (S&P Global Ratings) Sept. 27, 2017--S&P Global Ratings lowered its rating on Albert Gallatin Area School District, Pa.'s outstanding general obligation (GO) debt to 'A-' from 'A'. The outlook is stable.

"The downgrade is based on the district's ongoing structural imbalance since fiscal 2010, which has deteriorated available reserves significantly, to $2.3 million in fiscal 2016 from $7.9 million in fiscal 2010," said S&P Global Ratings credit analyst Michael Mooney. "We expect available reserves to improve in fiscal 2017 due to one-time measures the district has taken, but we believe structural imbalance will again occur in fiscal 2018. However, we do not expect available fund balance to turn negative over our two-year outlook horizon."

The district's full-faith-and-credit GO pledge secures the bonds. The Act 1 Index under Pennsylvania commonwealth statute restricts a district's ability to raise the tax levy higher than a certain index, which the Pennsylvania Dept. of Education determines. Despite these limitations, we did not make a rating distinction for the limited-tax GO pledge since we believe the district possesses the financial stability necessary to sustain identical ratings on its unlimited and limited tax GO bonds.

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 www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com and at www.spcapitaliq.com. All ratings affected by this rating action can be found on the S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.


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