Champaign County School District No. 116 (Urbana), IL GO Outlook Revised To Stable From Negative On Stable Reserves

Stocks and Financial Services Press Releases Friday March 17, 2017 08:58
CHICAGO--17 Mar--S&P Global Ratings

CHICAGO (S&P Global Ratings) March 16, 2017--S&P Global Ratings revised its outlook to stable from negative, and affirmed its 'AA-' rating on Champaign County School District No. 116 (Urbana), Ill.'s general obligation (GO) outstanding debt.

"The outlook revision reflects our opinion that the district's financial performance and reserve levels–which had previously been pressured by an imbalanced operating budget–have stabilized sufficiently," said S&P Global Ratings credit analyst Scott Nees.

"As such, we no longer believe financial deterioration significant enough to warrant a lower rating is likely in the next two years." The 'AA-' ratings reflect our view of the district's: Participation in the Champaign-Urbana economy, which is a regional center anchored by the University of Illinois;Consistent maintenance of very strong available reserves when including the working cash fund, despite recent declines and tax settlements with two local tax-exempt hospitals; andLow direct debt burden with moderate carrying charges and rapid principal amortization.

The above strengths are offset by the district's uneven budgetary performance in recent years, which had driven reserve levels below the district's targets.

Securing the district's series 2002 bonds is a general obligation (GO) pledge of the district backed by unlimited ad valorem property taxes. The series 2010A, B, C, and D, and 2011B alternate revenue sources (ARS) bonds are secured by the district's unlimited-tax GO pledge plus sales tax revenues.

We understand that the district annually abates the debt service levy on these ARS bonds to the extent that it anticipates revenues will be available to pay debt service.
Historically, the district has carried ample unrestricted cash reserves prior to semiannual debt service payment debts, mitigating potential liquidity risk caused by the uncovered abatement.
Securing the series 2011A bonds are legally available funds of the district, plus its debt service extension base, which is a property tax limited by the amount but not by the rate.
Annual debt service on the series 2011A bonds falls within this limit. We rate each of these series as a GO of the district
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