Fitch Rts Solon School District, OH's $6MM UTGO Bonds 'AA+'

Business Wire, Nov 24, 2003

Business Editors

CHICAGO--(BUSINESS WIRE)--Nov. 24, 2003

Fitch Ratings assigns a 'AA ' rating to Solon City School District, OH's (the district) $6 million general obligation (unlimited tax) school improvement bonds. The Rating Outlook is Stable. In addition, Fitch affirms the 'AA ' rating on the district's approximately $20 million of outstanding general obligation bonds.

Scheduled for negotiated sale by NatCity Investments, Inc. on or about Dec. 3, 2003, the bonds are dated Dec. 1, 2003, and mature serially 2004-2015, with term bonds due Dec. 1, 2019 and 2023. Semiannual interest payments commence June 1, 2004. Serial bonds maturing after Dec. 1, 2014 and term bonds are subject to optional redemption beginning Dec. 1, 2013. Secured by the district's full faith and credit pledge, the bonds will retire outstanding notes and finance various school facility improvements.

The rating reflects the district's wealthy economic base, well-regarded academic programs, strong management practices resulting in a sound financial position, and rapid debt amortization. Continued growth in the district's tax base and strong community support provides the district with the resources and financial flexibility to maintain its high academic standards. Proximity to Akron and Cleveland via an extensive roadway network as well as moderate tax rates make the district a highly desirable location.

Located in southeastern Cuyahoga County, 19 miles southeast of Cleveland and 22 miles northeast of Akron, the district serves students in grades K-12 in the City of Solon and the Village of Glenwillow. The educational programs of the district rank among the top in the state in terms of performance on statewide tests. The city's 2000 population estimate of 21,802 represents a 2.9% annual increase compared to 1997, and enrollment gains averaged 0.7% in the past five years, although Fitch expects growth to level off in the next few years.

The strong local economy has resulted in a 4.8% annual gain in the district's tax base since 1997. However, unemployment in Cuyahoga County (GO bonds rated 'AAA' by Fitch) stood at 6.7% for 2002, slightly above the metropolitan area's 6.5% and exceeding state and national rates of 5.7% and 5.8%, respectively. The city of Solon's per capita money income represents 169% of the state and 162% of the U.S.

The expanding economy, combined with the district's strong financial management, provided the resources to maintain the district's academic programs. The district ended fiscal 2002 (June 30) with a GAAP-based total general fund balance of $3 million or 6.3% of expenditures and transfers out. Local taxes provided 81% of the district's resources in fiscal 2002, while state aid represented 13% of the budget.

As is common in many Ohio school districts, the finances fluctuate as a result of required tax rollbacks designed to avert inflationary increases in property tax revenues, as well as needed voter approval to increase tax rates above the statutory 10-mill rate.

The most recent operating levy passed in 2001 and will require additional voter support in 2005, but the approval of every bond issue and tax levy increase since 1993 demonstrates the community's support of the district. A $10 million bond issue levy passed in 2003, with a strong 65% margin. The district plans to issue the remaining $4 million in the next three to four years.

The district's direct debt levels stand at a moderately low $1,167 per capita and 0.7% of full market value, while overall debt levels are moderate at $3,041 per capita and 1.9% of full market value.