Fitch Rates South Whittier Elementary School Dist, California GOs 'A+'

Business Wire, Feb 23, 2005

SAN FRANCISCO -- Fitch Ratings assigns an 'A+' rating to the South Whittier Elementary School District, California (the district) $7,500,000 general obligation (GO) bonds, election of 2004, series A. The bonds are scheduled to sell via negotiation through George K. Baum & Co. during the week of March 7. Proceeds of the bonds will be used to renovate and construct various school facilities within the district and to pay issuance costs. The Rating Outlook is Stable.

The 'A+' rating reflects the district's low debt levels, sound financial operations, and healthy assessed valuation gains. These factors are offset somewhat by the district's concentrated economic base. Future capital needs are manageable, considering the district's projections for moderate future enrollment growth. Financial operations are sound, achieving a stable fund balance level after declines in recent years. Assessed valuations have demonstrated healthy overall growth. The district's economic base is concentrated in the city of Santa Fe Springs. Unemployment levels are below average, while wealth levels are above state and national averages.

The district is located in Los Angeles County, approximately 10 miles east of downtown Los Angeles. The district serves primarily the cities of Santa Fe Springs and Whittier, along with portions of unincorporated Los Angeles County. Major employers in the county include Kaiser Permanente, Boeing, and Northrop Grunmann Corporation. Population in the district reached 29,700 in 2004, representing a 2% increase from 2000 levels. Demonstrating similarly modest growth, the city of Santa Fe Springs grew 1.6% over the same period. Both the city of Santa Fe Springs and Whittier have experienced slower population growth than Los Angeles County, which stands at 10 million residents currently, increasing 2.5% since 2000. The city of Whittier's unemployment rate has been consistently below county and state levels since 1995.

The district's tax base has also experienced steady growth in recent years. Assessed valuation in the district has increased at an above average rate of 6.4% annually since 1999 to $1.7 billion in 2004. While the city of Santa Fe Springs accounts for 48% of the district's assessed value, few residences are located there, suggesting high concentration of the district's economic activity and possible vulnerability to economic downturns. In addition, the top 10 taxpayers comprised 12% of total 2004 assessed value, indicating above average taxpayer concentration.

The district's financial position is healthy, with flexibility derived from good management, and moderate cash balances. The fiscal year (FY) 2004 general fund balance remains solid at $3 million or 10.1% of expenditures and transfers out, although it decreased 6.9% from FY 2003 levels. The district's debt burden is low with direct debt at $713 per capita and 1.21% of assessed value, while overall debt is $1,355 per capita and 2.3% of assessed value. The series A bonds represent the full issuance of a $7.5 million GO authorization approved by 77% of voters in a November 2002 special election under California's Proposition 39. The district does not plan to seek authorization to issue additional GO bonds in the foreseeable future.