Montague Area Public Schools, MI GO Bond Rating Raised To 'A' On Growth In Available Reserves

CHICAGO (S&P Global Ratings) Jan. 10, 2019--S&P Global Ratings raised its 
underlying rating to 'A' from 'A-' on Montague Area Public Schools, Mich.'s 
existing general obligation (GO) bonds. At the same time, we assigned our 'AA' 
long-term program rating and 'A' underlying rating to the district's series 
2019 GO unlimited tax refunding bonds. The outlook is stable. 

"The raised rating reflects our view of the district's proactive and 
conservative budgeting approach, which has led to significant growth in its 
available reserves," said S&P Global Ratings credit analyst Taylor Budrow. 
"The district has also benefited in recent years from relatively stable 
enrollment, which is the primary determinant of state aid," Mr. Budrow added. 

The series 2019 bonds are being issued to currently refund the district's 
outstanding 2009 school building and site bonds for interest-cost savings.

The 'A' rating reflects our view of the district's:

  • Limited yet stable local economy centered on tourism and manufacturing, with access to the Grand Rapids and Muskegon area economies;
  • Adequate to good income indicators and extremely strong market value per capita; and
  • Strong level of available reserves.
Partially offsetting the above strengths are the district's moderate to high 
debt profile and elevated fixed costs, which are not commensurate with those 
of its higher-rated peers, in addition to the expected use of its available 
fund balance in fiscal 2019.

The primarily residential district encompasses 96.4 square miles in portions 
of Muskegon and Oceana counties and is located approximately 20 miles north of 
Muskegon and 56 miles north of Grand Rapids. The district is situated along 
two rivers and a lake, which attracts both retirees and tourists.