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Janesville School District's credit rating remains strong

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Frank Schultz
November 5, 2013

JANESVILLE—Two credit-rating agencies say the Janesville School District is still a good bet for investors, and they have good things to say about Janesville's economy.

Moody's Investors Service and Standard & Poor's recently reviewed the school district's finances in preparation for a refinancing of district bonds. They did not change their previous ratings.

Moody's rates the district Aa2, which means the agency believes the school district is a high quality investment with a very low credit risk. It's a good rating but not quite as good as the Aa1 rating that Rock County government received from Moody's last month.

Moody's rating of the school district is similar to Standard and Poor's rating of the district, AA-.

Standard & Poor's rating means the district demonstrates “very strong creditworthiness,” according to the S&P website.

The ratings ensure good interest rates when the district issues bonds to refinance bonds issued for the 2004 high school referendum projects. Better interest rates will mean a savings to property tax payers starting next year.

The agencies believe the school board made solid decisions to spend down its fund balance in the past two years in order to get the district through the financial difficulties presented by Wisconsin Act 10, said Keith Pennington, district chief financial officer, in an email.

The board did not use its fund balance to make ends meet for the current fiscal year, and it set aside $1 million to fund future employee early-retirement benefits, both moves that the agencies viewed favorably, according to their reports.

S&P's report says its rating is based on  “a large economic base that is an anchor for the surrounding area, stable enrollment with anticipated modest growth, very strong general fund reserves (and) a moderate debt burden.”

S&P said one limit on these strengths is above-average unemployment.

District reserves, or fund balance, as they are often called, were $22.9 million as of June 30, “which we consider very strong at 21.4 percent of operating expenditures,” the S&P report states.

S&P says it does not anticipate changing its rating in the next two years, but it warns that would change if the district “significantly” draws down its reserves.

Moody's said its rating reflects the district's “large tax base in south-central Wisconsin, slightly below-average resident wealth levels, satisfactory general-fund reserves, manageable pension burden and slightly above-average debt profile.”

Moody's said the district's financial challenges are consecutive years of tax-base declines, “declining socioeconomic characteristics” and above-average debt burden.



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