Fitch Downgrades Sacramento City Unified School District, CA's GOs to 'A+'; Outlook Stable
NEW YORK --
Fitch Ratings downgrades the following Sacramento City Unified School District, California (the district) ratings:
--$313.7 million general obligation bonds (GOs) to 'A+' from 'AA-';
--$33.5 million certificates of participation (COPs) to 'A' from 'A+'.
--$33.5 million certificates of participation (COPs) to 'A' from 'A+'.
The Rating Outlook is revised to Stable from Negative.
SECURITY
The GOs are secured by an unlimited ad valorem property tax. The COPs are secured by annual lease payments to the Sacramento Schools Education Facilities Financing Corp. for the use and occupancy of essential district school buildings. The COPs are subject to annual appropriation and abatement risks.
KEY RATING DRIVERS
WEAK RESERVE POSITION: The downgrade reflects the district's weak financial reserve position and willingness to spend down reserves to low levels during periods of state funding pressure.
RESTORATION OF STRUCTURAL BALANCE: The district has aggressively trimmed expenditures and is expected to return its budgets to structural balance over the next year or two with the stabilization of the state funding environment. However, Fitch does not expect reserves to improve for some time