Fitch Rates $4.0MM Banning Unified School District, CA, GO Bonds 'A+'

Business Wire, May 12, 2004

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--May 12, 2004

Fitch Ratings assigns an 'A+' rating to $4.0 million Banning Unified School District general obligation bonds, 2002 election, series B (Riverside County, California) (Bank Qualified). In addition, Fitch affirms its 'A+' rating on roughly $8.0 million outstanding general obligation bonds. The Rating Outlook is Stable. The bonds are expected to sell via negotiation led by George K. Baum & Company on June 3rd.

The 'A+' rating reflects Banning Unified School District's sound financial operations and good fund balances, low debt levels, and adequate average annual assessed valuation (AV) growth. These factors are somewhat offset by a limited economic base, moderate taxpayer concentration, above-average unemployment rates, and below-average income levels.

Located in Riverside County, the district is home to 25,500 residents and encompasses a 303-square-mile area. The district sits astride Interstate 10 and comprises half the City of Banning, a portion of the City of Palm Springs, and unincorporated areas of Riverside County. Student enrollment for the current fiscal year is 4,216 and is projected to increase 15% over the next three years.

The local economy is heavily concentrated in agriculture. Unemployment and income levels are below state and national averages-characteristic of agriculturally based communities. Median household income for the district was $29,430 in 2000, well below median figures for the county, California, and the nation. Assessed valuation rose sharply in fiscal 2004 due to developments made by Shell WindEnergy, Inc. (a wind power company) and Nestle Water North America (a water bottling company). However, most of the growth in this assessed valuation is unsecured. Taxpayer concentration is moderate.

Financial operations are sound, marked by consistent operating surpluses and healthy general fund reserves. The fiscal 2003 ending general fund balance totaled 16.9% of expenditures and transfers out and has averaged 14.7% over the past four years. The unreserved general fund balance is also healthy, ending fiscal 2003 at 16.7%, well above the state 3% requirement. For fiscal year 2003, state revenues provided 63.4% of total general fund revenues.

This issuance is the second and final installment in a $12 million authorization, which passed with an affirmative vote of 67.6% in November 2002 under California's Proposition 39 election procedure. Proceeds of this issuance will be used for the construction of two multi-purpose rooms. The district expects state matching funds to supplement bond proceeds. Direct and overall debt levels are low at $476 per capita (1.0% of AV) and $906 (1.9% of AV), respectively. There are currently no plans to seek additional voter-approved debt.