April 11, 2017 Moody’s Investor Service has assigned an Aaa underlying credit rating to Edina Public Schools (EPS). The rating allows the district to obtain the lowest interest rates available when borrowing funds. An Aa2 enhanced rating was assigned to the district’s general obligation facilities maintenance and school building bonds, noting a “stable” outlook.
According to Moody’s, the underlying Aaa rating reflects the financial demographic profile of the district’s “large tax base, steady enrollment growth, healthy financial operations and forward looking planning, an above average debt burden, and an exposure to an underfunded cost-sharing pension plan.” The Aa2 enhanced rating is based on the additional security provided by the district’s participation in the state’s School District Enhancement Program (MSDE), which secures qualifying bonds.
EPS has maintained an Aaa rating for many years, according to Margo Bauck, director of business services and operations. “The Aaa rating is a reflection of the district’s sound financial stewardship and puts the district in an excellent financial position,” she said.
Not only does it ensure low interest rates on future borrowing (helping to minimize tax impact for property owners), it indicates Moody’s confidence in the district’s “strong financial management procedures…including a five-year forecast.”
With the report, Moody’s also noted potential factors that could lead to a downgrade in the rating, including declines in liquidity and/or reserve levels, growth in the district’s debt or pension burden and weakening of the MSDE program mechanics. Community support for the district’s fall operating levy renewal referendum is also a key factor in maintaining a high credit rating, Bauck said.
“We will be asking district voters to continue to support the work of the district when we seek to renew our operating levy in November — something that investor services will consider when making future ratings of the district,” Bauck said. “The ratings we have just received from Moody’s should give the Edina community assurance of the district’s commitment to sound financial practices and thoughtful stewardship of the funding we receive from taxpayers.”
In addition to the favorable credit rating, EPS also recently received the 2017 School Finance Award from the Minnesota Department of Education for financial reporting, further demonstrating the district’s commitment to financial stewardship.