Napa Valley Unified School District, CA's Series 2019C (Election Of 2016) GO Bonds Assigned 'A+' Rating

CENTENNIAL (S&P Global Ratings) Sept. 13, 2019--S&P Global Ratings assigned its 'A+' long-term rating to Napa Valley Unified School District, Calif.'s series 2019C (election of 2016) general obligation (GO) bonds (par amount: $119 million). At the same time, S&P Global Ratings affirmed its 'A+' long-term rating and underlying rating (SPUR) on the district's existing GO debt. The outlook is stable.
"The rating reflects our view of the district's expenditure reductions, following multiple years of structural imbalances as a result of declining enrollment and rising costs," said S&P Global Ratings credit analyst Michael Parker. "In addition, the rating reflects our expectation that the district will maintain available reserves at a level we consider at least adequate for the foreseeable future."
The district still maintains a formal reserve policy of 7.5% of general fund expenditures, and although it is currently underneath that level, officials expect to be back above the policy by 2021. While enrollment is still declining, the district has created and administered plans to help stabilize enrollment in the future.
The stable outlook reflects the district's stable financial position and good available reserves, despite declining enrollment and operating deficits in recent years. In addition, the outlook reflects the budgetary response from district officials to make substantial expense reductions, which we believe will contribute to balanced operations in fiscal 2020. Finally, the outlook reflects our anticipation that reserves will remain at or above adequate levels in the near term. We do not expect to change the rating within the two-year outlook horizon.
The series 2019C GO bond proceeds will be used to upgrade district facilities and pay the costs of issuance. Following the issuance of the 2019C GO bonds, the district will have approximately $534.6 million in totaled direct debt outstanding.
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