Fitch Rates Reynoldsburg City School Dist, Ohio's $24MM UTGOs 'AA'.

CHICAGO -- Fitch Ratings has assigned an 'AA' rating to Reynoldsburg City School District, Ohio's $24 million of school facilities construction and improvement bonds which will sell on March 23 in a negotiated underwriting through A.G. Edwards & Sons, Inc. The bonds will retire outstanding notes used to construct a new junior high school, renovate various school buildings, and purchase land. Approved by voters on Nov. 2, 2004, the bonds are secured by unlimited ad valorem property taxes. The Rating Outlook is Stable. Additionally, Fitch affirms the 'AA' rating on the district's outstanding general obligation (GO) bonds.

The 'AA' rating is based on the district's growing economic base, strong academic performance, significant financial flexibility, and capacity to manage an increasing debt burden. As a growing suburban community in the Columbus, Ohio metropolitan area, the district has increased its wealth and income levels, but growing enrollment has required expansion of its existing facilities and increased debt financing. The State of Ohio has approved funding for 43% of the district's capital facilities plan over the next decade. The district's diverse revenue stream and steady economic growth have contributed to strong financial performance. The availability of income taxes (0.5%) not only bolsters the district's financial resources, but reduces the frequency of seeking voter approval to sustain property tax levies.

Located in the eastern portion of Franklin County, the Reynoldsburg school district has grown 5.5% annually in the last decade. About three-quarters of the property tax base is residential and per capita income levels are average for the county and 8% above the national average. Services, government and retail trade comprise the most prominent industries in the area. Unemployment for the City of Reynoldsburg remains very low at 2.6% in December 2004, compared to 4.3% for Franklin County and 5.5% for the state.

In the last five fiscal years, Reynoldsburg City School District's total general fund balance improved to $14.5 million (31.1% of expenditures and transfers out) in fiscal 2004 from $8.4 million (25.5% of spending) in fiscal 2000. The district experienced strong growth in its operating revenues in the past five years, particularly in its tax receipts and state aid. Enrollment gains averaging 2.8% annually since 2000 led to increased state aid, which has grown 12% annually since 2000 and represented 54% of fiscal 2004 general fund revenue. Tax receipts include the district's general property tax and 0.5% income tax; these taxes together grew about 8.5% annually since 2000 and accounted for 44% of fiscal 2004 general fund revenue.

The district's increasing enrollment necessitated a sizeable capital plan, which currently totals $124.3 million. The first of three phases is largely complete and involved the construction of new elementary and middle school buildings, in addition to other improvements. This issue, which represents the second phase, will finance a new junior high school and land purchases in anticipation of a new high school, in phase three. The third and final phase will require a bond election for about $36 million, tentatively scheduled for 2006, but will be largely financed by state contributions. The district's rapid tax base growth and solid voter support for operating and capital needs will make additional debt manageable.

With this issue, direct debt equals $2,003 per capita and represents 3.5% of property value; assuming half the rate of its historical tax base growth and full debt issuance through 2013, future direct debt would equal 4.5% of property value. Including overlapping municipalities, the district's current overall debt is $2,160 per capita and 3.8% of property value.