Cherokee Schools Keep "Strong" Credit Rating

Moody's Investors Service has confirmed the Cherokee County School District will hold onto its current credit rating.

The school district retained what it calls its "strong" Aa1 enhanced rating and an Aa2 rating, according to Moody's rating action. The Aa1 and Aa2 are both the second and third highest ratings awarded by the agency, followed by the Aaa, which is the highest rating given by Moody's. 

The district had the Aaa rating, but its credit rating was downgraded in October 2012 due to dwindling property values and decreased state funding due to the economic downturn.

Both Aa1 and Aa2 are described by Moody's as "high quality with very low credit risk and strong ability to repay debt," adding both of which are desirable for any governmental entity in the current economic climate. 

Moody's confirmed the district's credit rating earlier this week, and the school district said the confirmation means it will "continue to see positive bond issuances and low interest rates in the marketplace."

"Our school district since 2008 has weathered its most challenging economic situation in the last 50 years, and has done so through the accurate budgeting and accounting of tax dollars by our Office of Financial Management and the strong stewardship by the school board," Superintendent of Schools Dr. Frank Petruzielo said. "As our local tax digest slowly recovers, and if the state continues to reduce its austerity budget cuts and returns to fully funding the legally required QBE formula, the school district’s financial position and credit rating will continue to improve."  

The Aa1 enhanced rating falls under the Georgia State Aid Intercept Program, and the Aa2 underlying rating is related to the district's credit for its issuance of general obligation bonds.  

Moody's did cast a "negative outlook" on the Aa2 rating due to the district having to rely on its cash reserves to weather dwindling state and local revenues and the impact of the economic recession has had on Special Purpose Local Option Sales Tax collections.

Along with building new and renovating existing schools and buildings, the district also uses sales tax revenue to pay off bond debt accumulated by its education SPLOST program. 

However, Moody states the outlook is expected to improve as the overall economy improves, which will bolster the district's cash reserves and sales tax collections.  

The agency also praised the district for using sales tax dollars to pay off debt, for its "strong socioeconomic indicators” and tax base.

Based upon his recommendation, Petruzielo said the board approved a policy two years ago to increase the district's reserves, and noted the fiscal year 2013-14 budget was balanced "without the need" to rely on its reserves. 

That policy, along with Woodstock's Outlet Shoppes at Atlanta opening, the replacement Northside Hospital-Cherokee under construction, other major retail announcements and the return of residential construction "are positive indicators for the school district’s current and future financial status, as is this positive report from Moody's." 

Don’t miss any of the local news you care about. Subscribe to Canton-Sixes Patch’s free newsletter, like us on Facebook and follow us on Twitter.