Hamilton Southeastern Schools, IN Bonds Upgraded To 'AA' From 'AA-' On Solid Financial Profile; Outlook Stable

CHICAGO (S&P Global Ratings) April 19, 2019--S&P Global Ratings has raised its underlying rating on Hamilton Southeastern Schools (the district or the corporation), Ind.'s bonds outstanding to 'AA' from 'AA-'. S&P Global Ratings has also assigned its 'AA+' long-term rating and 'AA' underlying rating to the $17.4 million 2019 general obligation (GO) bonds issued by the district and affirmed its 'AA+' long-term rating on previously rated bonds. The outlook on all ratings is stable.
"The upgrade reflects our view that the school's financial profile has continued to strengthen, aided by five years of consecutive operating surpluses and that the funding environment for the district will remain advantageous," said S&P Global Ratings credit analyst Anna Uboytseva.
The 'AA' underlying rating also reflects our view of the district's:
  • Economic prosperity of the surrounding area, and desirable housing;
  • Very strong wealth and strong income levels; and
  • Solid financial management practices that will continue to support a strong financial position.
The 'AA' on the 2019 bonds reflects the ad valorem property tax pledge.
The stable outlook on the 'AA+' long-term rating reflects S&P Global Ratings' assessment of the strength of the state aid intercept framework. The rating moves in tandem with the state issuer credit rating and outlook.
The outlook on the 'AA' underlying rating reflects our expectation that the district will maintain mostly balanced operations and at least strong cash reserves in the combined general, referendum, and rainy day funds; therefore, we do not expect to revise the outlook during our two-year horizon. The presence of the referendum levy, which offers budgetary support and growing revenues for the district, is a stabilizing factor. The district's location and participation in the diverse and growing Indianapolis metropolitan area economy are another stabilizing factor, given the access to jobs, economic prosperity of the surrounding area, and desirable housing.
If the district's financial operations fall out of balance in spite of the favorable funding environment and reserves decline significantly, we could lower the rating.
If reserves continue to improve and remain very strong after the district transitions to GAAP reporting and economic metrics continue to advance, we could consider a higher rating all else being equal.
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