Van Meter Community School District, IA GO Outlook Rating Revised To Negative On Available Fund Balance Decline

CHICAGO (S&P Global Ratings) Dec. 7, 2018--S&P Global Ratings revised its 
outlook to negative from stable on Van Meter Community School District, Iowa's 
general obligation (GO) bonds, and affirmed its 'AA-' long-term rating on the 
bonds. 

"We revised the outlook due to the recent decline in available fund balance," 
said S&P Global Ratings credit analyst Daniel Hughes. "We believe the decline 
has materially weakened the district's credit profile and makes it susceptible 
to unexpected expenditures and emergencies if available fund balance continues 
declining, or remains at nominally thin levels."

The district's available fund balance declined from $2 million, or 36% of 
general fund expenditures at the end of fiscal 2013 to an estimated $314,000, 
or 4% of general fund expenditures at the end of fiscal 2018. While reserves 
have declined significantly, we recognize the district has the ability to 
rebuild reserves through its cash reserve levy, and management intends to use 
this levy over the next few fiscal years. However, if the district fails to 
increase reserves, in our view, the district's credit quality would no longer 
be commensurate with its current rating. 

The district's unlimited-tax GO pledge secures its GO debt.