Summerfield Schools, MI GO Debt Rating Raised To 'A' From 'A-' On Improved Finances

NEW YORK (S&P Global Ratings) Dec. 7, 2018--S&P Global Ratings raised its 
underlying rating on Summerfield Schools, Mich.'s general obligation debt one 
notch to 'A' from 'A-'. The outlook is stable. 

"The rating action reflects our opinion of the district's improved expenditure 
management and financial performance," said S&P Global Ratings credit analyst 
Kevin Barry.

The underlying rating reflects our opinion of the district's: 
  • Access to nearby employment bases, including Ann Arbor and Toledo, Ohio;
  • Very strong general fund reserve levels; and
  • Low overall net debt burden.
Declining enrollment tied directly to state aid and high pension and other 
postemployment benefits partially offset the above strengths. 

The stable outlook reflects S&P Global Ratings' opinion that management will 
likely maintain very strong reserves during the two-year outlook period, 
supported by the expectation it will likely continue its conservative 
budgeting and make budgetary adjustments as needed. Access to nearby 
employment bases, including Ann Arbor and Toledo, also lends stability to the 
rating. 

If economic metrics were to improve to levels commensurate with those of 
higher-rated peers and the district experienced stabilization in enrollment, 
while maintaining reserve levels we consider very strong, holding other 
factors equal, we could raise the rating.

If the district were unable to manage enrollment or large pension liabilities, 
causing performance to weaken and reserves to decline to levels we no longer 
consider commensurate with those of its peers, we could lower the rating.