West Contra Costa Unified School District, CA GO Bond Outlook Revised To Positive On Stronger Available Reserves

Stocks and Financial Services Press Releases Wednesday April 11, 2018 11:11
CENTENNIAL--11 Apr--S&P Global Ratings

CENTENNIAL (S&P Global Ratings) April 10, 2018--S&P Global Ratings revised its outlook to positive from stable and affirmed its 'AA-' long-term rating and underlying rating (SPUR) on West Contra Costa Unified School District, Calif.'s general obligation (GO) bonds outstanding. At the same time, S&P Global Ratings assigned its 'AA-' long-term rating, with a positive outlook, to the district's:

  • 2018 GO refunding bonds,
  • 2018 series D GO bonds (2012 election), and
  • 2018 series E GO bonds (2010 election).

The 2018 GO refunding bonds will be used to refund the district's election of 2002 series C GO bonds (capital appreciation bonds), 2009 GO refunding bonds, and election of 2010 series A GO bonds outstanding. Proceeds from the 2018 series D and series E GO bonds will finance the acquisition, construction, improvement, furnishing, and equipping of certain district facilities.

"The outlook revision reflects our view of the district's sustained strengthening of available reserves, supported by a recently enhanced minimum fund balance policy and the recent board approval of several budget cuts, which management anticipates will eliminate the district's structural imbalance," said S&P Global Ratings credit analyst Alyssa Farrell.

The ratings further reflect our opinion of the district's:
  • Strong local economy with extremely strong wealth and above-average income indicators and participation in the broad and diverse San Francisco Bay Area economy;
  • Maintenance of a very strong reserve position;
  • Additional revenue flexibility provided through the voter-approved assessment district program and parcel tax, which was recently extended for a 10-year period; and
  • Good financial management policies and practices.
Partly offsetting the above strengths, in our view, are the district's high overall net debt burden on a per capita basis, elevated carrying charges, and slow amortization.

The positive outlook reflects our opinion that there is a one-in-three chance that we could raise the ratings within our two-year outlook horizon. If the district's recently approved budget cuts prove fruitful and the district is able to report sustained structural balance in the next two years while managing its relatively elevated debt service requirements, we could raise the ratings. However, if the district were to draw down on its fund balances to levels we consider good according to their current multiyear forecasts, we could revise the outlook back to stable.

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