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Fitch Rates Roseville Joint Union HSD, California $26MM GOs 'AA'.

NEW YORK -- Fitch Ratings assigns an 'AA' rating to $26 million Roseville Joint Union High School District (Placer and Sacramento Counties, California) election of 2004 general obligation (GO) bonds, series A. In addition, Fitch affirms its 'AA' rating on roughly $36.8 million outstanding GO bonds. The Rating Outlook is Stable. The bonds are expected to sell via negotiation led by Stone & Youngberg on April 11.

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 somewhat offset by fiscal concerns resulting from the State of California's budget uncertainties, growth-related fiscal and capital pressures, and some taxpayer concentration. The district has experienced strong AV growth-averaging over 11% since fiscal 1998. Population growth and building activity have been, and are expected to remain, vibrant. 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 makes up the majority of the district's assessed value with unincorporated areas in Sacramento County comprising the remaining portion. Student enrollment for the 2005 fiscal school year is about 8,400 and is projected to increase by 1,400 new students by fiscal year 2011. 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 of the area. In 2004, city unemployment (4.2%) was below state and national rates, and income levels are well above state and national averages.

Financial operations are marked by healthy general fund reserves. Despite a drawdown in fiscal 2004 -- the first since fiscal 1997 -- the ending fund balance remains solid at 13.4% of spending, exceeding the state's 3% minimum requirement as well as the district's 10% minimum fund balance policy. A projected operating deficit for fiscal 2005 is expected to draw down the fund balance to a still favorable 11.3% of spending. State revenues as a share of total general fund revenues declined from about 27% in fiscal 2003 to 18% in fiscal 2004. This highlights reductions in state education funding and the district's increasing reliance on local revenue sources (primarily property taxes) -- indicative of a vibrant tax base.

This is the first issuance of 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, modernization projects at two high schools, and acquisition costs of a site for a sixth high school. 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 $466 per capita, or 0.4% of market value, while overall debt level is moderate at $3,253 per capita, or 2.9% of market value. Principal amortization is slightly above average.
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Publication:Business Wire
Date:Apr 7, 2005
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