Periodically the Waukee School District issues debt obligations in order to finance school construction projects. When doing so Moody’s Investor Services issues ratings of those bonds. The ratings are a grade given to bonds that indicate their credit quality via an evaluation of a bond issuer’s financial strength and the ability to pay a bond’s principal and interest in a timely fashion. The rating is important to potential investors in those bonds.
On February 8 Moody’s issued a rating of Aa2 for the Waukee School District. The rating contained the following analysis of the district:
“The Aa2 rating reflects the district’s sizeable and growing tax base that includes multiple communities in the western portion of the Des Moines metropolitan area, solid financial history and expectation that General Fund reserves will remain sound, and above average debt position with future borrowing anticipated.”
- Sizeable tax base that benefits from ongoing growth and an above average demographic profile.
- Solid financial management supported by the use of available operating levies.
- Fairly concentrated tax base.
- Rapid enrollment growth that can create near-term pressure due to Iowa’s education funding formula.
- Above average debt burden with further borrowing anticipated.”
The analysis goes on to state:
“The district is expected to realize ongoing tax base growth owing to its location within the expanding western Des Moines metropolitan area that is characterized by continued residential and commercial development. Over the past five years, the district’s tax base has increased at a healthy average annual rate of 5% to a current full valuation of $4.5 billion…Steady residential development has been driven by substantial growth in district population, which measured 181.5% between the 2000 and 2010 census periods followed by 191.8% growth between the 1990 and 2000 census periods…
SUCCESSFUL ACCUMULATION OF RESERVES HAS RESULTED IN A FAVORABLE FINANCIAL POSITION TO OFFSET EXPECTED SPENDING
Strong fiscal management has supported a steady increase in financial reserves that favorably positions the district going forward. Since fiscal 2005, the district has closed all but one year with an operating surplus…The series of favorable results follows from management’s demonstrated history of controlling cost growth and utilization of the available cash reserve levy.
Reigning in cost growth has been a regular priority of management given that the district has realized steady enrollment growth averaging 7.1% annually over the past five years…”