Fitch Rates Clark County School District, Nevada $560MM Rfdg GOs 'AA'

Business Wire, Feb 23, 2005

SAN FRANCISCO -- Fitch Ratings assigns an 'AA' rating to $325 million Clark County School District, Nevada, general obligation (limited tax) refunding bonds, series 2005A, and $235 million general obligation (limited tax) refunding bonds (additionally secured by pledged revenues, series 2005B). Fitch also affirms the 'AA' rating on Clark County School District's (the district) $2.6 billion outstanding general obligation bonds.

The Rating Outlook is Stable. The bonds are scheduled to sell competitively on Feb. 24, with Nevada State Bank Public Finance acting as the district's financial adviser. E[acute accent]The 'AA' rating is based on the district's large and growing economic base, strong assessed value growth, moderate debt levels, adequate financial position, and good long-term capital planning and management practices. These factors are offset somewhat by growth-related financial and capital pressures. The rapidly expanding population continues to translate into strong demand for additional school facilities. These capital needs are addressed primarily through voter-approved limited tax general obligation (GO) and limited tax GO revenue bond sales. Although still heavily dependent on the tourism and gaming industries, the district economy continues to diversify. E[acute accent]The district operates the nation's sixth largest school system, serving a fiscal 2004 student population of 268,357, or roughly 70% of all school children in the state. The district population is more than 1.7 million; nearly one million above the 1990 population. Clark County (the county) and district boundaries are coterminous and include the cities of Las Vegas, North Las Vegas, Henderson, Boulder City, and Mesquite. Enrollment growth has averaged 5.7% annually since 1999 and is expected to continue. Labor relations are good, with four-year agreements in place. E[acute accent]The district area economy is sound. Although concentrated in tourism and gaming, construction and local service industry jobs continue to expand and diversify the economy. Considerable construction activity has contributed to healthy assessed value gains. In addition, economically sensitive taxes, including sales taxes, transient room taxes, and real estate transfer taxes, continue to rebound to above pre-Sept. 11 levels. Unemployment levels in the Las Vegas MSA continue to decline, ending December 2004 at a much improved 3.5%, as compared with 4.5% in December 2003. County income levels closely match those of the state but are slightly above national averages. Double-digit assessed valuation gains continue into fiscal 2005, rising nearly 13.7%, with a six-year average annual increase at 11.64%. E[acute accent]The district's finances remain adequate and improved considerably in fiscal 2004. Audited data for 2004 show the general fund ending balance at $108.3 million, a dramatic rise from its $47.1 million level in fiscal 2003. However, the district intends to spend down its fund balance as it has reserved $32 million for a new district business system to be implemented during fiscal years 2005 and 2006 and $11.8 million for future labor contract agreements, as well as other one-time expenditures for transportation needs. Nonetheless, the fiscal 2005 budget maintains the unreserved and undesignated fund balance at the 2.0% level. E[acute accent]The 2005A bond proceeds will refund portions of the district's outstanding series 1999 and series 2002C bonds. The 2005B bond proceeds will refund portions of the district's series 2001F bonds. The 2005A and 2005B bonds are secured by the district's full faith and credit, primarily a limited ad valorem tax levy. The 2005B bonds are additionally secured by revenues generated from the district's share of room tax and real estate transfer tax revenues. E[acute accent]Debt levels are and should remain moderate, as additional bonds are offset by a rapidly rising population and assessed values, along with rapid amortization of outstanding debt (61% in 10 years). Direct debt level is $2,041 per capita and 2.4% of market value, while overall debt level is 2,265 per capita and 2.7% of market value.