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Moody's Investors Service Inc.

Moody's Affirms Jefferson County School District R-1, CO's Aa2 Issuer Rating Despite Fiscal Challenges

Strategic Insights

— 1 min read

The Jefferson County School District R-1, CO has been affirmed by Moody's Investors Service with a negative outlook, reflecting the district's challenges in maintaining a stable general fund balance due to ongoing capital expenditures. As of fiscal 2024, the district had approximately $770 million of debt outstanding, with a significant portion of it being unfunded pension liabilities. The district's solid local economy, with a high per capita value and median resident income, is offset by the decline in enrollment due to aging demographics and elevated housing costs.

Key Takeaways:

  • The district's Aa2 issuer rating reflects its solid local economy, but also its challenges in maintaining a stable general fund balance.
  • The district's general fund balance is expected to narrow to 15% of revenue in 2025 and 12% of revenue in 2026 due to ongoing capital expenditures.
  • The district plans to address the funding gap by approaching voters in November 2026 to request a mill levy override, additional debt, or make significant budget cuts.
  • The Aa1 general obligation unlimited tax (GOULT) rating is one notch higher than the district's issuer rating, primarily due to the security features of Colorado school district GOULT bonds.
  • The Aa3 lease appropriation rating reflects the annual risk of non-appropriation and the essential nature of the leased assets, including four elementary schools and Pomona High School.
  • The district's long-term liabilities ratio is 406% of fiscal 2025 budgeted revenue, primarily due to unfunded pension liabilities.

Statistics:

  • Debt outstanding: $770 million as of fiscal 2024.
  • General fund balance: expected to narrow to 15% of revenue in 2025 and 12% of revenue in 2026.
  • Long-term liabilities ratio: 406% of fiscal 2025 budgeted revenue.
  • Enrollment decline: expected to decline by 1% annually due to aging demographics and elevated housing costs.
  • Population growth: solid local economy with a per capita value of $256,000 and a median resident income of 130% of the national median.

Sources:

  • Moody's Investors Service, "Jefferson County School District R-1, CO", August 10, 2024.
  • Moody's Ratings, "US K-12 Public School Districts", July 2024.
  • Moody's Ratings, "Rating Methodologies", available at https://ratings.moodys.com.

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