Global Credit Research – 21 Dec 2015 New York, December 21, 2015 — Summary Rating Rationale
Moody’s Investors Service has affirmed the Baa2 rating of East Ramapo Central School District, NY’s $10.9 million in outstanding general obligation debt secured by an unlimited tax pledge. The outlook remains negative.
The Baa2 rating reflects ongoing weakness in the district’s financial position, despite recent improvement. Given its limited liquidity, the district is a regular issuer of cash flow notes to fund operations. The rating also incorporates the district’s substantial tax base, average wealth levels, and minimal debt burden with rapid amortization of principal.
Moody’s notes that the school district has overlapping boundaries with the Town of Ramapo (A1 negative), which is currently under federal investigation for reasons that have not been publicly disclosed. The school district is an autonomous governmental entity from the town and there is no indication that the federal investigation extends to the school district or any of its management or officials.
The negative outlook incorporates the expectation the district will continue to face financial strain from rising special education, instruction and transportation costs given limits on revenue growth. Although the district’s financial position improved following the sale of two buildings which returned fund balance to positive levels, flexibility remains limited. Without additional revenues or expense reductions, the fund balance will likely deteriorate. The state continues to contemplate putting the district under increased state oversight, but uncertainty remains regarding the state’s future level of involvement in the district’s operations.
You can access the complete Moody’s report here.