Fitch Rts Clark County School District, Nevada $325MM GOs 'AA'

Business Wire, Sept 20, 2001

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 20, 2001

Fitch assigns its 'AA' rating to Clark County School District, NV's (the district) $325 million general obligation (limited tax) building bonds (additionally secured by pledged revenues), series 2001F, and affirms its outstanding rating of the district at `AA'.

The bonds are scheduled to sell competitively on Sept. 26, 2001.

The rating is based on the district's large and growing economic base, moderate debt levels, adequate financial position, and good long-term capital planning and management practices. The rapidly expanding population continues to translate into strong demand for additional school facilities. These capital needs are addressed primarily through voter-approved bond measures supported by a property tax rate increase and certain other revenues.

Additional revenues pledged to the series 2001F bonds and $446.7 million in outstanding parity debt consist of a 1 5/8% transient room tax and a $0.60 per $500 in value real estate transfer tax. Reductions in air travel and tourist activity nationwide following the recent terrorism attacks causes concern over hotel tax performance in the near term.

Over the longer term, uncertainties include possible permanent changes in behavioral patterns regarding air travel, tourism and entertainment. However, the series 2001F bonds are general obligations of the district and are ultimately payable from district ad valorem taxes. Financial operations remain under pressure as a result of ongoing growth-related costs.

The district operates the nation's sixth largest school system, serving 246,289 students, or roughly 65% of all school children in the state. It is the nation's fastest-growing school district. The county and district boundaries are coterminous, including the cities of Las Vegas, North Las Vegas, Henderson, Boulder City and Mesquite.

District facilities include 264 schools with 16 more scheduled to open during the 2002 school year. Enrollment growth has averaged 6.5% annually over the last six years and is expected to continue. District population is 1.4 million, nearly double that of 1990.

The district area economy is strong, characterized by its rapid population growth, low unemployment, considerable construction activity and healthy assessed value gains. While somewhat concentrated in tourism and gaming, construction and local service industry jobs continue to diversify the economy. Unemployment levels are slightly above the national average at 4.2% and income levels are about even with state and national averages. Assessed valuation growth continues with annual gains averaging more than 11% over the past five years.

The bonds are part of a massive ongoing capital program driven by rapid enrollment growth throughout the district. Good voter support continues for the district's substantial capital needs, which are estimated at $3.8 billion through fiscal year 2008. Debt levels have remained moderate as additional bonds are offset by strong increases in population and assessed valuation. Overall debt levels are $2,200 per capita and 3.3% as a percent of market value.

The district's finances are adequate though under pressure. Costs associated with rapid enrollment growth including new school construction and additional teachers, rising salaries and limited increases in state funding have contributed to general fund operating deficits in fiscal 1999 and 2000. Fund balance levels were reduced but remain satisfactory. A small operating surplus is projected for fiscal year 2001 with higher levels of state support in 2002 and 2003.