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Clay school district credit outlook downgraded

BY DAN HILDEBRAN

Monitor Editor

Fitch ratings downgraded its credit outlook for the Clay County School District from stable to negative because of weakening reserve levels, the rating agency said in a Jan. 17 press release.

The agency affirmed its A+ rating for the district’s $53 million in certificates of participation and $2.7 million in state revenue bonds.  However, it warned that those ratings could change.

“Failure to demonstrate the expected continual strengthening of financial reserves to more historical levels over the next couple of years would likely result in a downgrade of the rating,” Fitch said.

The bond rating agency said that at the beginning of 2012, the district had a healthy unrestricted general fund balance of $19.7 million.  However, in 2012, with the loss of federal stimulus funds, the district posted an operating deficit of $9.3 million.  The following year, the district recorded another operating deficit of $6 million due to an unexpected decrease in student enrollment which reduced state educational revenues to the district.  Fitch added that the 2013 deficit was also increased by $3.3 million in additional spending for new hires, a salary step increase for teachers and additional benefit costs.

Fitch said that in spite of low reserve levels, the district’s debt ratios remain low, and the county’s socioeconomic profile is favorable, with higher than average median family income, a lower than average poverty rate and an unemployment rate lower than state and national levels.

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