Moody's Assigns Aa3 Rating to Adel-Desoto-Minburn Community School District, IA's General Obligation School Bonds Series 2025

Strategic Insights -

Moody's Investors Service has assigned a Aa3 rating to Adel-Desoto-Minburn Community School District, IA's General Obligation School Bonds Series 2025, with a proposed par amount of $8.5 million. The district's growing enrollment, continued augmentation of residential valuations, and stable finances have contributed to the Aa3 issuer rating, which reflects the district's strong credit profile. The district's operating funds' available fund balance ratio improved to 19% in 2024, driven by a surplus in the debt service fund. Finances will remain stable as the district expects a modest general fund surplus in 2025.

Key Takeaways:

  • The Aa3 issuer rating reflects the district's growing enrollment, continued augmentation of residential valuations, and stable finances.
  • The district's operating funds' available fund balance ratio improved to 19% in 2024, driven by a surplus in the debt service fund.
  • The available fund balance increase is driven by a stable debt service tax rate that has exceeded required debt service payments.
  • The debt service fund will continue to build reserves in preparation for escalating debt service in 2026.
  • The district's GOULT bonds are rated at the same level as the Aa3 issuer rating based on the district's full faith and credit pledge and authorization to levy a dedicated property tax that is unlimited as to rate or amount.
  • The district has an additional $34 million in voter authorization, post-sale, which it plans to issue in the subsequent 5 years.
  • The district's location near Des Moines will continue to benefit from a healthy resident income ratio of 134% and full value per capita over $154,000.
  • Enrollment has grown at a 2% compound annual growth rate (CAGR) since 2021 and will continue to grow in the coming years driven by residential development in the district and open enrollment gains.

Statistics:

  • The district's long-term liabilities ratio will grow to nearly 250% of 2024 revenue, inclusive of the current sale.
  • The district's GOULT bonds have a proposed par amount of $8.5 million.
  • The district's operating funds' available fund balance ratio improved to 19% in 2024.
  • The debt service fund will continue to build reserves in preparation for escalating debt service in 2026.
  • The district's resident income ratio is 134%, with a full value per capita over $154,000.

Sources:

  • Moody's Investors Service: "Moody's Rates Adel-Desoto-Minburn Community School District, IA's General Obligation School Bonds Series 2025 Aa3" (no date)
  • Moody's Investors Service: "US K-12 Public School Districts" (July 2024, available at https://ratings.moodys.com/rmc-documents/425431)
  • Moody's Investors Service: "Rating Methodologies" (available at https://ratings.moodys.com)