Fitch Rates Solon School District, OH's $5.1MM UTGO Bonds 'AA+'

Business Wire, Dec 8, 2004

CHICAGO -- Fitch Ratings assigns an 'AA+' rating to Solon City School District, OH's (the district) $5.1 million general obligation (unlimited tax) school improvement refunding bonds, series 2004, scheduled for negotiated sale by NatCity Investments, Inc. on or about Dec. 9, 2004. The Rating Outlook is Stable. In addition, Fitch affirms the 'AA+' on the district's approximately $19 million of outstanding general obligation bonds. Secured by the district's full faith and credit pledge, the bonds will refinance certain maturities of the district's series 1993 general obligation school improvement bonds.

The 'AA+' rating reflects Solon City School 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 provide the district with the resources and financial flexibility to maintain its high academic standards. Located in southeastern Cuyahoga County, 19 miles southeast of Cleveland and 22 miles northeast of Akron, the district serves students in grades kindergarten through 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 with 1997, and enrollment gains averaged 0.9% 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 4.7% annual gain in the district's tax base since 1997. Unemployment in Cuyahoga County (general obligation bonds rated 'AAA' by Fitch) stood at 6.7% for September 2004, slightly above the metropolitan area's 6.1% and exceeding state and national rates of 5.7% and 5.1%, respectively. The City of Solon's per capita income represents 169% of that of the state and 162% of that 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 2003 (June 30) with a Generally Accepted Accounting Principles (GAAP)-based total general fund balance of $793,878, or 1.6% of expenditures and transfers out. Local taxes provided 83% of the district's resources in fiscal 2003, while state aid represented 15% 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 moderate $1,108 per capita and 0.7% of full market value, while overall debt levels are moderate at $3,053 per capita and 1.9% of full market value.