Moody's Affirms Aaa Rating for Alpine School District

The Alpine School District in Utah has maintained its Aaa issuer and general obligation bond ratings, according to Moody's Investors Service. The district's strong resident income and wealth profile, coupled with steadily increasing enrollment, has contributed to its impressive financial standing. Moody's has also affirmed the Aa1 lease revenue rating on outstanding debt and assigned a Aa2 rating to the district's upcoming sale of $238 million in Lease Revenue Bonds.

Key Takeaways:

• Moody's affirmed the Aaa issuer and general obligation bond ratings on Alpine School District, UT, reflecting the district's strong resident income and wealth profile in the growing Salt Lake metro area.
• Alpine has experienced steadily increasing enrollment, with a three-year historical average of 1.5%, and management anticipates moderate enrollment trends moving forward.
• The district's reserves and liquidity, as a percent of operating revenues, are slightly below Aaa medians, but management is anticipating large general fund surpluses in both fiscal 2025 and fiscal 2026.
• The district has managed its long-term liabilities effectively, with total liabilities remaining manageable at around 164% of fiscal 2024 operating revenues (inclusive of the new sale).
• Alpine's assets and liabilities, including outstanding bonds, will be allocated amongst the three new districts based on their proportionate assessed value, following the district's breakup in 2027.
• The Aa1 rating on the district's outstanding lease revenue bonds reflects a one-notch distinction from the district's issuer rating, taking into consideration the essential nature of the leased assets and the riskier nature of pledged revenues.
• The Aa2 rating on the lease revenue bonds, Series 2025, is two notches below the issuer rating, reflecting the unusual debt structure and transition risk associated with the district's dissolution.

Statistics:

• The Alpine School District covers an area of approximately 724 square miles and has a fiscal 2025 enrollment of around 85,000.
• The district's outstanding GO and lease revenue obligations will total $710.2 million post-sale.
• The district has assigned a Aa2 rating to the lease revenue bonds, Series 2025, with a face value of $238 million.
• The district's reserves and liquidity are 19% and 34% of operating revenues, respectively.
• The district's long-term liabilities are 164% of fiscal 2024 operating revenues (inclusive of the new sale).

Sources:

• Moody's Ratings (Moody's), news release (no date)
• Moody's Investors Service, US K-12 Public School Districts, methodology published in July 2024, available at https://ratings.moodys.com/rmc-documents/425431.