Moody’s Investors Service Rating

Moody’s Investors Service has affirmed the A1 rating on St. Johns County School Board’s 2006 Certificates of Participation totaling $115.2 million. The bonds are secured by the Board’s annually-appropriated lease payments and are paid from a portion of the district’s 1.5 mills of capital outlay funds available for this purpose.
According to Moody’s, the A1 rating affirmation reflects the district’s financial position characterized by sound management and high reserve levels, below average debt levels and large tax base.
In 2007-2008 the district began aggressively building reserves through extensive expenditure cuts in anticipation of state cutbacks and the loss of federal ARRA funds in 2012. The district reduced its operating budget by 25% through the elimination of over 300 administrative and support positions, a savings of $2.5 million in energy costs, the reduction of vendor payments by $500,000 and the implementation of medical clinics to help control the costs of a self-insured health plan, in addition to various other cost-cutting measures. These efforts have allowed the district to build up its reserves.
Despite these increases to reserves, Moody’s believes the district will be challenged when the $14.9 million of ARRA federal funds, as well as the $4.8 million from the 0.25 mill critical millage levy, are no longer available to the district in 2011-2012. In addition, the possibility of further state budget cuts is anticipated in light of the projected state deficit. Last year the district appropriated $8.3 million of its fund balance to balance its budget.
“The Board and administration have been working hard since 2006 to focus our limited and shrinking resources on academic success,” said Chief Financial Officer Conley Weiss. “This work has been made difficult by Florida’s economy, forcing schools to do more with less. It is nice to see Moody’s maintain our bond rating at A1 and acknowledge our efforts to control our financial position, just as we are trying to maintain the quality of our product.”
Moody’s expects that the school district’s large $27.7 billion tax base will decrease in the short term after years of substantial growth. Assessed values are expected to decline by 20% to $19.7 million this year from its high of $24.6 million in 2007-2008. This would be the second year of significant declines in the tax base after five years of an average 15.3% growth. The SJCSD is also one of the few districts in the state still experiencing increased student enrollment.  
Moody’s expects the district’s debt position to remain manageable given its below-average debt burden and no medium term future debt plans.