MOODY'S INVESTORS SERVICE ANNOUNCES POLICY TO RATE KENTUCKY SCHOOL LEASES MINIMUM 'A'
MOODY'S INVESTORS SERVICE ANNOUNCES POLICY TO RATE KENTUCKY SCHOOL
LEASES MINIMUM 'A' NEW YORK, Dec. 12 /PRNewswire/ -- Effective today, Moody's Investors Service released an "A" rating on the Kentucky Interlocal School Transportation Association (KISTA) Equipment Lease Revenue Bonds, Series of 1991, and a minimum "A" rating on the outstanding obligations of the pool's participating school districts. Moody's expects to assign a minimum "A" rating, after individual analysis, to all long-term Kentucky school financings. Future credit ratings will be based on the following features: the sustained high credit quality exhibited by the Commonwealth; the Kentucky Department of Education's (DOE's) continued strong management and control procedures; ample funding to local school districts; and its ability to withhold state aid, if necessary, to avert a potential default on any local school district's debt service payments. The DOE's strong management and controls are highlighted by the following features: sustained involvement with various aspects of a local board of education's fiscal operations; annual budget approval processes; and lease issuance approval processes corresponding with every sale. In addition, the DOE is expected to make substantial, fungible DOE funds available directly to the paying agent, if necessary, to meet any potential shortfall in a local school district's debt service payments. Largely resulting from historically strong DOE management, DOE officials report that there has never been a default on any Kentucky school financings. Currently, DOE officials can remove all elected school board officials who display negligence, misconduct, or other wrongdoing. The Commonwealth offers a management assistance program to at least five school districts every year who may need additional financial consultation. Any school district exhibiting a recurring operating deficit, however small, is placed into DOE management assistance until the situation is rectified. The DOE's powers have been strengthened as a result of Kentucky's school reform legislation, House Bill 940, which became effective on April 11, 1990. School reform, and its corresponding primary and secondary education spending, is a stated top priority of the Commonwealth. No cuts in state aid for schools resulted from the Commonwealth's $155 million shortfall in budgeted revenues for fiscal 1991-92. In addition to strong DOE management, the state aid intercept is also a critical component of Kentucky school lease analysis. By regulation, local school districts are required to transfer funds for debt service to the paying agent ten calendar days prior to the payment due date. The paying agent is required to notify the DOE at least eight calendar days prior to the due date if the local school district has failed to transmit such funds. The DOE shall then resolve the matter with the local school district or intercept appropriate funds due to the local school district and transmit them to the paying agent within the eight-day window. DOE officials have stated to Moody's that not only can a particular school district's monthly state aid payment be withheld to pay debt, but should that prove insufficient, all unrestricted Department of Education monies are available as well. This includes approximately $1.5 billion in Support Educational Excellence in Kentucky (SEEK) monies for fiscal year 1991-1992 ($125 million available monthly). Moody's will continue to evaluate the assignment of a rating higher than "A" to Kentucky school districts based on the credit attributes of each individual district. -0- 12/12/91 /CONTACT: Marcy Edwards, 212-553-0322, or Amy Hamburg, 212-553-7782, both of Moody's/ CO: Kentucky Interlocal School Transportation Association ST: Kentucky IN: SU: RTG FC-KW -- NY065 -- 2049 12/12/91 15:06 EST
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|Date:||Dec 12, 1991|
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