Moody's Assigns A1 Rating to Midland Community School District's General Obligation School Bonds

Strategic Insights -

The Midland Community School District, located in east central Iowa, has secured an A1 rating for its General Obligation School Bonds, Series 2025, with a proposed par amount of approximately $9.2 million. This rating reflects the district's strong economy, stable enrollment, and increasing financial flexibility. The district's agricultural economy supports a solid full value per capita of more than $137,400 and a resident income ratio of 91%. Enrollment remains stable at around 500 students, and the district has begun levying for cash reserves, which will increase its financial flexibility.

Key Takeaways:

  • The Midland Community School District has an A1 issuer rating, reflecting its agricultural economy and stable enrollment.
  • The district's available general fund balance will increase by nearly $1 million in 2025, but the available fund balance ratio will decline to around 21%.
  • The district's long-term liabilities ratio will grow to under 248% in 2025, from under 200% in fiscal 2024, but will remain lower than the A-rated median.
  • The A1 GOULT rating is the same as the issuer rating due to the district's full faith and credit pledge and ability to raise property taxes without limitation.
  • Factors that could lead to an upgrade of the rating include restoring the available fund balance ratio above 25% and a long-term liabilities ratio below 200%.
  • Factors that could lead to a downgrade of the rating include a sustained period of declining enrollment and a long-term liabilities ratio above 300%.
  • The district provides education for roughly 500 students in kindergarten through twelve and has a population of around 4,000.
  • The principal methodology used in this rating was US K-12 Public School Districts, published in July 2024, and is available at https://ratings.moodys.com/rmc-documents/425431.

Statistics:

  • Proposed par amount of the General Obligation School Bonds, Series 2025: $9.2 million
  • Outstanding GOULT debt: $15.1 million
  • Resident income ratio: 91%
  • Full value per capita: more than $137,400
  • Enrollment: stable around 500 students
  • General fund balance increase in 2025: nearly $1 million
  • Available fund balance ratio in 2025: around 21%
  • Long-term liabilities ratio in 2025: under 248%
  • Long-term liabilities ratio in fiscal 2024: under 200%

Sources:

  • Moody's Ratings
  • "US K-12 Public School Districts" methodology published in July 2024, available at https://ratings.moodys.com/rmc-documents/425431
  • Rating Methodologies page on https://ratings.moodys.com