Fitch Rates Mohawk Local School District, Ohio ULT GO's 'A+'.

Business Editors

CHICAGO--(BUSINESS WIRE)--March 26, 2004

Fitch Ratings assigns an 'A+' rating to Mohawk Local School District, Ohio $7,872,000 various purpose bonds, unlimited tax. The bonds are scheduled to sell through a negotiated underwriting led by Butler Wick & Co., Inc. on April 12. The bonds will consist of current interest bonds (CIBs) and capital appreciation bonds (CABs). Dated April 1, 2004, the CIBS will mature serially beginning December 1, 2004-2031. The CABs, which are dated the date of issuance, will mature on December 1, 2015 and are not subject to redemption prior to scheduled maturity. The CIBs maturing on or after December 1, 2014 are callable beginning December 1, 2013 at par value. The bonds are direct obligations of the district and are payable from unlimited ad valorem taxes. Bond proceeds will be used to construct a school facility to replace existing school buildings and to finance an all-weather track. The Rating Outlook is Stable.

The 'A+' rating and Stable Outlook reflect the district's sound financial position, substantial state financial support, growing tax base, and moderate direct debt burden. The district's debt levels should remain affordable because of strong internal funding practices and the limited need for additional debt.

Mohawk Local School District is located in portions of Wyandot and Seneca Counties in Northeast Ohio, approximately 60 miles southeast of Toledo. Although the counties are rural in nature, sector employment and sources of earnings are led by manufacturing for both counties. Over the past decade, the district's current population of 6,342 has experienced a 7.7% increase; nevertheless, student enrollment has remained flat at 1,146. Enrollment is projected to experience modest growth (1%-2%) over the next several years.

Since 1998, the district's overall tax base has grown steadily, averaging 6.5% annually due to property tax reassessments and some residential development. There is no tax base concentration within the district. The top 10 taxpayers constitute only 4.4% of the district's total tax base. Ohio Power Company is the district's top taxpayer, accounting for 1.4% of the tax base.

The district's financial position is sound, as reflected by operating surpluses over three of the past four years. In fiscal 2002 and 2003, the general fund balance totaled $1.2 million (18.2% of spending) and $0.7 million (10.1% of spending), respectively. The 2003 general fund balance decline was primarily due to the district's retirement of outstanding debt. Currently, the district does not maintain a formal fund balance policy; however, management informally has set a target of maintaining its fund balance at two months of operating expenditures. In 2004, the fund balance is expected to decline by $200,000 due to the acquisition of the property on which the new school facility will be constructed. The internal financing of this acquisition is a part of the district's contribution to the comprehensive capital program, largely funded by the state. Despite the projected fund balance decline in 2004, financial operations are expected to be balanced.

Direct debt ratios for the district are moderate reflecting $1,241 net direct debt per capita and 3.16% of full market value. Overall debt per capita is also moderate at $1,330 per capita and 3.39% of full value. Proceeds of the current bond issue will replace and consolidate four of the district's school facilities into one. After this issue, no additional debt is planned and debt levels should remain manageable; the bonds and the district's recent use of the general fund for capital projects should cover all major capital needs for the next 10 years.