Brown County School Corp., IN Debt Outlook Revised To Stable From Negative On Restored Structurally Balanced Operations

NEW YORK (S&P Global Ratings) March 24, 2020--S&P Global Ratings revised its outlook to stable from negative and affirmed its 'A+' underlying rating on Brown County School Corp., Ind.'s existing general obligation (GO) bonds, Brown County Multischool Building Corp.'s existing first-mortgage bonds issued for the school corporation, and Brown County High School and Nashville School Building Corp.'s existing debt. At the same time, S&P Global Ratings assigned its 'AA+' long-term and 'A+' underlying ratings to Brown County Schools' $3.7 million series 2020 GO bonds. The outlook on all the ratings is stable.
"The outlook revision reflects our view that the district has restored structurally balanced operations and has maintained its cash position at very strong levels which we believe are likely to be sustained over the next two years," said S&P Global Ratings credit analyst Moreen Skyers-Gibbs. Through ongoing proactive measures in light of expenditures associated with increased self-insurance benefits and ongoing enrollment declines, the district was able to avoid further operating shortfalls by achieving savings through attrition, consolidation of duties, and implementing tight budgetary controls and efficiencies. Although cash remains below the 40% of operating expenditures (prior to the structural imbalance), we believe its operations have stabilized and its current cash will likely provide the district the financial flexibility to continue to absorb revenue loss from ongoing enrollment declines. We also believe that based on a worst-case scenario that should health care costs rise as a result of unexpected insurance claims that the district has sufficient cash on hand to absorb the increase.
The long-term rating reflects our assessment of the Indiana state aid intercept structure as it applies to Brown County School Corp.
The stable outlook on the state credit enhancement rating reflects our views of the state's creditworthiness and that its support for the program will remain strong. We expect that coverage will consistently remain strong over the two-year outlook horizon given the program's structural features and recent state aid and enrollment trends.
The series 2020 bonds are a GO of the school corporation, payable from ad valorem property taxes levied against all taxable property within its borders.
Officials intend to use bond proceeds to fund renovations and improvements to school facilities.
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