S&P Rts Menlo Park City School Dist,CA GO Bnds 'AA-'.

NEW YORK--(BUSINESS WIRE)--July 9, 1998-- Standard & Poor's CreditWire 7/9/98 -- Standard & Poor's today assigned its double-'A'-minus rating to Menlo Park City School District, Calif.'s general obligation bonds series 1998B. The bonds are scheduled to sell July 21, 1998.

The rating reflects: -- One of the communities in Silicon Valley and home to numerous high-technology firms, -- Very high and increasing assessed valuation, and -- A stable financial performance.

The district (estimated population 31,250) is located 60 miles southeast of San Francisco and serves most of the unincorporated cities of Menlo Park and Atherton. With an enrollment of 1,924, the district provides K-8 education at three elementary schools and one middle school. This issue serves as the last installment of $22 million in G.O. bonds approved by 82% of voters in 1995, with proceeds to be used towards modernizing the district's facilities. Voters also renewed a parcel tax in 1995 and the district expects to receive approximately $630,000 annually through 2004.

Located in one of the wealthiest areas of the state, the district is in the Silicon Valley area and neighbors Stanford University. The district is a suburb of the greater San Francisco area and is home to numerous high-technology and venture capital firms.

Leading employers include Raychem Corp., Sun Microsystems, and SRI International. The taxpayer base within the district is diverse, with the top 10 taxpayers comprising only 7.6% of total assessed valuation (AV). The flourishing local economy and the fact that the area is fairly built-out has led AV to increase steadily -- rising to 9.9% in 1998 for a total of $3.49 billion, or a high $111,989 per capita. In 1997, the average home price was $596,828 for Menlo Park and $1,616,398 for Atherton. Median household incomes are 148% of the state average and 152% of the national average.

The district has maintained stable financial performance, posting break-even or operating surpluses between fiscal 1995-1997. For fiscal 1998, the district anticipates a small operating deficit of $266,000 and a general fund balance of $449,000, or 3.9% of expenditures. Notably, the district maintains the state's required 3% reserve in the special reserves fund. Including the special reserves fund, the district's total fund balance jumps to 8.5%. The district's fiscal 1999 budget projects a small operating deficit of $233,000 and a general fund balance of $417,000, or 3.6% of expenditures. Including the special reserves, the total fund balance increases to 6.6% for fiscal 1999. The district maintains a minimum 5% reserve between the general and special reserve funds combined. The district receives additional revenue from outside sources, including the Menlo Park Education Foundation ($415,000 in 1997-1998) and the Parent-Teacher Association contributed $400,000 in 1997-1998. The district provided a manageable 3% cost-of-living adjustment (COLA) to employees in 1997-1998 (supported through sources of one-time monies from the state) and expects a 2.18% COLA in 1998-1999. The student-to-teacher ratio is 25:1 in kindergarten, 20:1 in grades one through three, and 27:1 in grades four through eight.

Overall net debt is manageable at $50.4 million, or $1,615 per capita. The district does not anticipate issuing additional debt in the near future.

OUTLOOK: STABLE The outlook for the district is based on a strong growing economy, increasing assessed valuation, and a stable financial position, Standard & Poor's said. -- CreditWire

Contact: Alison Fong, San Francisco (1) 415-765-5035 Jeffrey Thiemann, San Francisco (1) 415-765-5006 Copyright 1998, Standard & Poor's Rating Services