Standard and Poor's Rating Services recently announced a drop in the financial ratings of the Pleasanton Unified School District. The report is a reflection of the district's credit-worthiness, which is essentially moved from "very strong" to "strong."
The scale of the obligator's ability to meet financial commitments ranges from AAA (extremely strong) to A (strong). According to the report, the rating and underlying rating went from AA- to A+ on PUSD's outstanding general obligation bonds. The S&P rating for the district's outstanding certificates of participation were also lowered from A+ to A.
"The downgrade was based on the recent fund balance decline, which reduced the financial flexibility of the district during the difficult state funding environment," said Jen Hansen, an analyst for Standard and Poor's Rating Services. "[The district does rely on state funding, which restricts the revenue growth to a state-equalized per-pupil funding formula."
The report also said that in addition to fund balance declines and reliance on state funding, another offsetting factor for the district is a high per capita debt burden of $5,110.
On the positive side, S&P reports show the district having a strong residential and commercial economic base as well as a diverse tax base "with very high income and wealth indicators."
Paul Dyson, an analyst for S&P, said not many other school districts have had ratings lowered.
"The rating reflects the fact that the district is operating under lower reserves now than it has historically," he said, adding that they hold those with excellent ratings to a higher standard.
The S&P report for San Ramon Valley Unified School District was raised to AA from AA- for their general obligation bonds, citing a "strong unreserved general fund balance and revenue flexibility in the form of a parcel tax."
Luz Cazares, assistant superintendent of Business Services at PUSD, said the lowered rating is still good, but reflects the drop in reserves, which had been at about 4.5 to 5 percent, instead of the state-required 3 percent, where it now stands. As for the immediate impact, she said the district is not planning to issue any debt.
"I wouldn't be surprised to know if we were in the company of many," Cazares said. "Most districts had to dip below the reserve limit and we had a board willing to make cuts."
In updating the state budget situation, Cazares said she is awaiting news from the state legislature on how it's planning to resolve the Legislative Analyst Office's $21-billion deficit that was recently released in a multi-year forecast.
The next meeting of the school board is Wednesday, Dec. 16, with a board workshop discussing the search for a new superintendent from 5 to 6 p.m., followed by the regular meeting at 7 p.m. Both portions will be broadcast live on TV30's channel 28 and on the district's webcast.