Schools seek to join brethren with AAA
- Blog Post by: Steve Brandt
- November 24, 2012 - 7:57 PM
Minneapolis school officials made their case for a higher credit rating this month to three rating agencies, and should find out in the next few days how how the raters view district's finances.
The district now has an AA rating, and it's seeking a promotion to AAA, the rating enjoyed by the city of Minneapolis, Hennepin County and Metropolitan Council. But making the kind of ratings jump that school finance officials are seeking can take years of demonstrating improved financial management. Plus, it's a two step jump for the district to go from its current underlying Aa2 rating from Moody's Investor Services to the Aaa rating it seeks.
The district plans to issued about $80 million in debt next week, almost $40 million for maintenance and renovation purposes and the balance refinancing older debt.
Finance officials told Moody's representatives during their visit last week that the district has healthy budget surpluses that compare well to other districts, stronger financial management, and has the same strong local economy that has helped the city and county's ratings. Mentioned only in passing was that the district has been dipping into its budgetary surplus to balance a budget that's currently structurally unbalanced. Chief Finance Officer Robert Doty said that creating a balanced budget is a priority for 2014.
The city regained its AAA rating in 2010 under Mayor R.T. Rybak after paying down some of the financial excesses of the era of Mayor Sharon Sayles Belton and Council President Jackie Cherryhomes, which resulting in the 2001 lowering of the city's rating. Hennepin County's AAA rating is at least 30 years old.
[Update: Fitch Ratings, the first rater to publicize its rating, is keeping Minneapolis at AA, citing uncertain state finances that cast a pall over state aid prospects for the district.]
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