Fitch U.S. Muni Surveillance: Wasco Union School District, CA's GOs Affirmed at 'A'; Outlook Stable.

NEW YORK -- In the course of routine surveillance, Fitch Ratings affirms the 'A' rating on Wasco Union School District, California's (the district) $6.1 million in general obligation (GO) bonds series 2001A and 2004.

The 'A' rating reflects the district's low debt levels and sound financial operations with good historical fund balances coupled with a special reserve fund that provides additional financial flexibility. Assessed valuation (AV) gains to date have been healthy although the district could experience declines in the near future given the high level of foreclosures. The district's economic base is concentrated in agriculture. March unemployment levels hit a high of 15.9%, which is well above both state and national averages, and wealth levels remain below state and national averages.

Located in Kern County, about 24 miles from Bakersfield and 80 miles from Fresno, the district is comprised of four elementary schools and one middle school. The district's somewhat limited economy is reflective of Kern County, the largest oil and third largest agricultural producing county in the nation. Major employers and taxpayers in the district are concentrated in agriculture. AV growth has been strong, increasing an average of 9.5% since 2001 although the weakening economy and housing market could results in drastic declines in AV. Enrollment has risen steadily but experienced a slight decline in 2008.

Financial operations are marked by healthy general fund reserves. The district's 2008 fund balance is a healthy 7% of expenditures and transfers out. The district also maintains a Special Reserve Fund of $1.8 million that provides increased financial flexibility if needed. The district's prudent financial management, willingness to take appropriate budgetary action, and its sound reserve levels position it well to meet the challenges of additional state funding cuts.

The district's direct debt levels are low at $294 per capita and 0.83% of market value. Debt amortization is average with 44% retiring in 10 years. Given that the district has no major identified capital needs, the 'A' rating reflects Fitch's expectation that the debt burden will remain affordable.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.