Fitch Rates Roseville Joint Union HSD, California $25MM GOs 'AA'.
The 'AA' rating reflects Roseville Joint Union High School District's (the district) low to moderate debt levels, strong assessed valuation (AV) growth, high wealth levels, and healthy fund balances. These factors are slightly offset by ongoing growth-related fiscal and capital pressures. Principal amortization has slowed with this issue and is now below average. The district has experienced strong AV growth, averaging close to 13% annually since fiscal 2000. Population growth and building activity have been and remain strong. Above-average wealth indicators and high per-capita retail sales characterize the district's economic profile.
Located 16 miles northeast of Sacramento in Placer and Sacramento Counties, the district's economy is diverse and expanding. The City of Roseville (the city), along with unincorporated areas in Placer County make up the majority of the district's assessed value with unincorporated areas in Sacramento County comprising the remaining portion. Student enrollment for the 2006 fiscal school year is about 8,634 and is projected to increase by 1,823 new students by fiscal 2011, a larger increase than previously predicted, indicative of the area's rapid growth. The local economy is largely residential with a good mix of commercial and industrial businesses. The district's strategic location off Interstate 80 contributes to the retail strength. In 2005, city unemployment (4.0%) was below state and national rates, and income levels remain well above state and national averages.
Financial operations are marked by healthy general fund reserves. The fiscal 2005 ending fund balance climbed to $7.1 million, or a solid 12.9% of spending. Fiscal 2006 year-end estimates project a slight drawdown. These results continue to exceed the state's 3% minimum requirement as well as the district's internal 10% fund balance policy. Adding strength to the district's credit, the unreserved fund balance rose by over $1.0 million to $3.6 million, or 6.5% of spending. District revenue growth continues to be propelled by rising enrollment and assessed values. Of note is the district's decreased reliance on state revenue sources as its AV continues to soar and provide a larger share of revenue-limit sources. District expenditures are dominated by employees' salaries and benefits. The district reportedly enjoys a stable and cooperative relationship with its labor unions, with contracts set in place through June 2007.
This is the second issuance from a $79 million bond measure approved by nearly 60% of voters in November 2004 under California's Proposition 39 election procedure. Bond proceeds will fund construction of a fifth high school, building of permanent classrooms at two other high schools, and completion of stadium turf and track at several schools. In the face of rising construction costs, district management is implementing an adaptive capital plan -- indicative of a prudent management action. The bonds are part of a facilities master plan that will be supplemented by developer fees and state matching funds. Debt ratios are mixed with direct debt, low at $589 per capita, or 0.5% of market value, while overall debt level is moderate at $3,891 per capita, or 3.2% of market value. Principal amortization is below average at 44.2% paid in 10 years.