District 157-C Maintains "AAA" Bond Rating from Standard & Poor's

For the tenth consecutive year, Frankfort School District 157-C has achieved an “AAA” bond rating from Standard & Poor’s Rating Services.  Only about two dozen school districts in Illinois, and six dozen school districts in the United States, have achieved this rating in 2013.  The district’s thoughtful strategic planning and meticulous financial records provided Standard & Poor’s an essential component of their evaluation and contributed to District 157-C earning the top rating with a stable outlook. 

The report from Standard & Poor’s Rating Services reflects its view of the district’s participation in the Chicago metropolitan statistical area’s deep and diverse economy, very strong income levels and extremely strong market value per capita, very strong reserves in its general fund, good financial management under its financial management assessment methodology, and moderate overall debt burden as a percentage of market value. 

Maintaining this excellent “AAA” bond rating will result in lower bond issuance costs and lower interest rates, as well as the ability to forego additional bond insurance. This is particularly important as district administrators continue to look for ways to reduce costs and control fixed overhead.  The Board recently approved issuance of not to exceed $17,700,000 general obligation refunding school bonds for the purpose of refunding certain outstanding levies of the school district, and providing for the levy of a district annual tax sufficient to pay the principal and interest on said bonds.  This refinancing responds to recent declines in equalized assessed valuation by lowering and stabilizing annual debt service requirements, and it also achieves interest cost savings by refinancing some callable bonds and restructuring the new debt as serial bonds.  This financing plan will smooth out the district’s annual debt service at a more manageable level of about $4.2 million per year for the next several years, and it anticipates a second phase of restructuring occurring in early 2014.

District 157-C has a long history of careful strategic planning.  Utilizing an overall 15-year Facilities Plan and a 5-year Strategic Plan, the district deliberates future enrollment, cash flows, fund balance levels, tax rates, facility needs and debt structure.  This strong strategic planning methodology has allowed the district to manage enrollment growth while maintaining a strong financial position. In addition, in past years when Equalized Assessed Valuation (EAV) growth was significant, the district paid down some of its callable debt early, and now that the EAV base has been declining for the past few years the district is able to restructure and stretch out its debt to provide relief for taxpayers.

Standard & Poor’s Ratings Services report states, “The stable outlook reflects our anticipation that the district will maintain its balanced financial operations while it weathers enrollment changes and the relatively flat property tax revenues ensuing from decreases in EAV.  We do not anticipate changing the rating within the two-year parameter of the outlook because we anticipate the district’s general fund reserves will remain very strong.  The district’s participation in the deep and diverse Chicago metropolitan area economy provides further stability to the rating.”

Assistant Superintendent for Finance & Operations Curtis J. Saindon was pleased with the rating, stating, “The ‘AAA’ bond rating with a stable outlook related to our two upcoming bond issues is awesome and extremely unusual given the economic downturn our state and country has endured during a large part of this past decade.  To maintain the ‘AAA’ Standard & Poor’s rating over the past decade is truly remarkable.  This is an extraordinary compliment to the School District and our Board of Education, and it reflects very positively on our community.”