Fitch Rates Washington County School District, Utah's $20MM GOs 'AA-'; Outlook Stable.

SAN FRANCISCO -- Fitch Ratings assigns an underlying 'AA-' rating to Washington County School District (the district), Utah's $20 million general obligation (GO) school building bonds (Utah School Bond Guaranty Program), series 2009. In addition, these bonds are rated 'AAA' by Fitch based on the guaranty provided by the Utah School Bond Default Program. Fitch also affirms the underlying 'AA-' rating on the district's $249.7 million in outstanding GO bonds. The Rating Outlook is Stable.

The new bonds are expected to sell through competitive bid on Jan. 13, 2009.

The 'AA-' rating reflects the district's low debt burden, rapid debt amortization, low taxpayer concentration, and solid financial position, with healthy reserve levels. While the district's recent history of fast population, employment, and assessed valuation (AV) growth has slowed in the current economic climate, its local economy has become more diverse. The school board has demonstrated a willingness to adjust its capital improvement program in response to economic and school enrollment trends. While the district's personnel cost pressures have lessened, its reliance on state and federal funding reduces financial flexibility.

The district is located in southwest Utah, coterminous with Washington County. The district's previously robust population growth, with average annual increases of 5.9% since 2000, has slowed. Taxable AV has increased significantly, averaging 17% per year since 1999. Residential expansion has been the largest source of AV growth, although the county's commercial sector expansion has also been contributing. A major source of local economic growth has been the increasing presence of major warehouse distribution facilities given the county's location relative to the huge retail markets of California, Arizona, and Nevada. Wealth indicators are mixed. While income levels are below state and national levels, reflecting a skew toward lower-wage occupations and a large retiree population, per capita retail sales are higher, as a result of the county's position as a retail hub for surrounding communities.

Financial operations continue to exhibit strong performance, characterized by healthy accumulated reserves and conservative management practices. The total unreserved general fund balance was a healthy $19.8 million in fiscal 2008, representing 13.4% of spending. The total unreserved and undesignated general fund balance was $14.2 million or 9.6% of spending.

While the district is a frequent issuer, its debt burden remains manageable given its healthy tax base growth. Direct debt is low at $2,016 per capita and 1.5% of market valuation. Overall debt, including county and city issuances, is also low at $2,479 per capita or 1.8% of market valuation. Payout is rapid at 76% in 10 years. The current sale represents the second installment of a $150 million authorization approved by 62% of voters in June of 2006. Bond proceeds will fund the purchase of school sites, buildings, furnishings, and improvements to existing school property. Direct and overall debt levels are projected to remain low even after the issuance of the remaining $80 million bond authorization.

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