|
Fitch Ratings assigns an underlying 'A' rating to the School District of
Pasco County, Florida's (the district) approximately $89.5 million sales
tax revenue bonds, series 2007. The bonds, expected to be insured by
FSA, are scheduled to price competitively on or about Jan. 30th. Ford
and Associates is the district's financial advisor. Proceeds of the
series 2007 bonds will fund the acquisition and construction of two new
elementary schools, a new middle school, and a portion of a new high
school. In addition, Fitch affirms the following ratings on the
district's outstanding debt:
-- Approximately $5.3 million general obligation bonds at 'A+';
-- Approximately $218.8 million certificates of participation at 'A'.
The Rating Outlook on all the bonds is Stable.
The 'A' rating reflects sound coverage of debt service by pledged
revenues, satisfactory legal provisions as well as the underlying credit
characteristics of the school district. The latter include sound
financial performance, robust tax base growth and low debt levels.
Credit risks include a limited economy with below average wealth levels
and the district's substantial capital needs related to rapid enrollment
growth, which could pressure financial operations in the near term. The
stable outlook reflects Fitch's view that continued growth in sales tax
revenues will result in solid coverage levels throughout the life of the
bonds.
Security for the bonds is provided by a lien upon and pledge of levy and
collection of a one-cent discretionary sales tax narrowly approved by
county voters in March 2004. Proceeds from the sales tax, which took
effect on Jan. 1, 2005 and will expire on Dec. 31, 2014, must be spent
on capital projects. Proceeds of the tax are shared between the county,
the school district, and six municipal governments. The district expects
to receive roughly $240 million over the life of the tax and
approximately $26.1 million in the current fiscal year. The district's
fiscal 2006 sales tax revenues totaled $24.8 million and provide
coverage of 1.74 times (x) maximum annual debt service (MADS), occurring
in fiscal 2011. Projected sales tax revenues reach $31.7 million by
fiscal 2011, and the legal provisions are standard for this type of
security; historical sales tax receipts must cover MADS by 1.25x.
Solid financial management resulted in operating surpluses of $1.2
million-$7.3 million each year of this decade. However, the district's
fiscal 2006 surplus was only a positive $701K after transfers in, and
the unreserved general fund balance decreased to $22.7 million, or 5.7%
of spending, from $26.6 million in fiscal 2005. This was due largely to
missed enrollment projections of about 1,000 students and an increase in
reserves for other purposes, which includes funds for the district's
deferred retirement option plan that are not legally restricted. Due to
its somewhat limited revenue-raising ability and sizable expenditure
pressures, particularly related to state-mandated class size reduction,
the district remains susceptible to state-funding declines. State
revenues represented a substantial 67% of district revenues and
transfers in fiscal 2006.
Enrollment growth averaged a strong 5% annually since academic year
1999-2000 and stands at 64,132 students, an increase of roughly 2,000
students over last year. However, the district underestimated enrollment
growth by about 600 students this academic year. The district expects
that under enrollment will reduce fiscal 2007 revenues by about $3
million, but a hiring freeze and other expenditure cuts will result in a
fund balance nearly equal to that of fiscal 2006. Projected student
enrollment growth rates through academic year 2010-2011 are more modest
at roughly 2% compounded annually. There are 62 schools in the district
and most of the enrollment growth is centrally located.
The district's fiscal years 2007-2011 capital improvement plan (CIP)
totals $684.3 million, significantly higher than the $91 million of
capital needs identified in the fiscal 2000 CIP. The plan covers the
construction costs related to 18 new schools and additions to six more,
for 945 additional classrooms. Roughly $296.9 million, or 43.4%, of the
plan is attributable to this fiscal year, and funding sources have been
identified for 60% of the plan. The school district has no further plans
to leverage the sales tax, but will issue roughly $130 million of
certificates of participation (COPs) this fiscal year. District direct
debt is low, at $782 per capita and 1.30% of taxable assessed value.
Pasco County is located centrally on the west coast of Florida, about 30
miles northwest of Tampa. The county is a tourist destination given its
proximity along the western coast of Florida, with eastern portions of
the county more agriculturally-based. The county is also largely a
retirement destination; one-quarter of residents are aged 65 or older.
County unemployment rates have been above state levels but equal to or
below national levels since 2002. Per capita income in 2005 was 89.8%
and 88.3% of state and national averages, respectively.
Fitch's rating definitions and the terms of use of such ratings are
available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality, conflicts
of interest, affiliate firewall, compliance and other relevant policies
and procedures are also available from the 'Code of Conduct' section of
this site.
|