By Joseph Pratt
Moody’s, one of three major credit rating agencies, has dropped New Boston Local School District’s underlying rating to a Baa1 from an A3.
The Baa1 rating is the eighth level down the rating system and the A3 level is seventh, so the drop is only down one point. Also, both ratings fall within the medium grade risk levels, with A3 being just slightly on the lower end of the spectrum.
“The Baa1 rating reflects the district’s small but appreciating tax base with a weak socioeconomic profile, elevated debt burden with slow principal amortization, adequate general fund reserves given the district’s modest budget, and exposure to two poorly funded state pension plans,” the report by Moody’s said.
New Boston Local Schools Superintendent Melinda Burnside said that she isn’t too concerned about the issue right now.
“We aren’t concerned about the report at this point,” Burnside said. “We cannot do anything to control these issues, so we are looking at the things we can deal with and do something about. We don’t see this as a big issue at New Boston Schools.”
Burnside said she is currently more focused on the strengths listed in the report, which she says the school is working on increasing even more.
“The strength of New Boston is certainly having an adequate reserve position, given the district’s modest budget, which is likely to remain stable,” Burnside said. “That, to me, is the important thing; we need to concentrate on stability.”
The cause of the drop, according to Moody’s, was an underlying rating on New Boston Local School District’s outstanding general obligation unlimited tax (GOULT) debt. The Baa1 rating applies to $3.2M of rated GOULT debt. Moody’s suggested that the credit rating could increase, should they witness a significant expansion of the district’s tax base or socioeconomic profile, as well as a moderated debt burden and reduced exposure to unfunded pension liabilities.
The rate could also drop, most notably by narrowing financial reserves or a growth in the district’s debt or pension burden.
Visit www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.
Reach Joseph Pratt at 740-353-3101, ext. 1932, or by Twitter @JosephPratt03
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