Escondido, CA
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School district bonds earn high rating

Moody’s Investors Service has assigned an Aa2 rating to the Escondido Union School Districts’ $55 million Election of 2014 General Obligation Bonds, Series B.

Moody’s took into consideration the fact that the district is both large and growing.

The rating was issued November 20.

The Aa2 rating reflects the district’s large, growing tax base that benefits from its location within a strong regional economy, despite socioeconomic indicators that are slightly below the medians for the category; manageable debt and pension liability levels; and conservative management. The rating incorporates a healthy financial position, however pressured by declining enrollment that has reduced revenues, a challenge that management has proactively addressed. The rating also accounts for the strength of the unlimited tax pledge, secured by ad valorem property taxes for debt service that are levied, collected, and disbursed by the county, outside of the district’s operations.

Rating Outlook

Outlooks are usually not assigned to local government credits with this amount of debt outstanding.

Factors that Could Lead to an Upgrade

– Significant sustained increases in fund balance and cash reserves

– Sustained growth in the tax base

– Material increase in resident wealth measures

Factors that Could Lead to a Downgrade

-Decline in financial position or cash reserves

– Decline in the tax base or resident wealth measures

Legal Security

The current issuance will be general obligations of the district. The San Diego County Board of Supervisors has the power and obligation to levy and collect ad valorem taxes upon all property within the district subject to taxation, without limitation as to rate or amount (except certain personal property taxable at limited rates) for payment of principal and maturity value of and interest on the bonds.

Use of Proceeds

Proceeds of the current issuance will be used to fund modernization and security improvements at several school sites in the district.

The Escondido Union School District operates 17 elementary schools for students in kindergarten through fifth grade, one intermediate school for students in 4th through eighth grade, and five middle schools for students in sixth through eighth grade. For fiscal 2017, the District had enrollment of 15,760 students.

Methodology

The principal methodology used in this rating was US Local Government General Obligation Debt published in December 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

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