Westfield Washington Schools, IN Debt Outlook Revised To Stable From Positive On Sharp Shift In Financial Strategy

Stocks and Financial Services Press Releases Tuesday September 12, 2017 09:12
CHICAGO--12 Sep--S&P Global Ratings

CHICAGO (S&P Global Ratings) Sept. 11, 2017--S&P Global Ratings revised its outlook to stable from positive, and affirmed its 'A-' underlying rating on debt issued for Westfield Washington Schools, Ind. We also assigned our 'A-' underlying rating and 'A' long-term program rating to the series 2017 ad valorem property tax first-mortgage refunding bonds, issued by Westfield Washington High School 1995 Building Corp. on behalf of the school district.

At the same time, we affirmed our 'A' long-term rating and underlying rating (SPUR) on various obligations issued on behalf of the school district that meet certain criteria for the Indiana State Aid Intercept program. The outlook on the 'A' program rating is stable. "The outlook revision reflects the district's plan to spend down a large portion of the general fund cash balance in calendar year 2017," said S&P Global Ratings credit analyst Anna Uboytseva.

"This plan to reduce reserves represents a reverse from early 2016, when reserves were projected to strengthen for 2017. Recognizing the change in the financial direction, we revised the outlook to stable to reflect emerging vulnerabilities." We didn't take a negative rating action because the district has a history of successfully operating the budget with thin reserves.

We also expect the district to maintain positive reserves in 2018 based on management's projections and based on our experience with other high growth districts in the state. Additionally, the state funding is expected to increase 2.6% and 1.6% in fiscals 2018 and 2019, which is above the average other school districts receive in the state; however, management didn't factor these increases in the forecasts. (For more on Indian school districts, see our article, titled "Medians And Credit Factors: Indiana School Districts," published Aug. 1, 2017, on RatingsDirect).

If reserves decline unexpectedly and reach negative levels, we could lower the rating. The 'A' rating reflects the district's participation in the Indiana State Aid Intercept program; the bonds do not qualify for the 'AA+' enhanced program rating due to state aid not covering maximum annual debt service (MADS) by 2x. The outlook on the program rating remains stable. 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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