Moody's Assigns Aa3 Rating to Roseville Joint Union High School District's School Facilities Improvement District

Strategic Insights -

Moody's Investors Service has assigned a Aa3 rating to Roseville Joint Union High School District's (RJUHSD) School Facilities Improvement District (SFID) 1, CA's Election of 2007 General Obligation Bonds, Series E (School Facilities Improvement District No. 1) in the expected par amount of approximately $51 million. Concurrently, the agency has affirmed the district's outstanding Aa3 issuer and Aa2 general obligation unlimited tax (GOULT) ratings and the SFID's Aa3 GOULT rating.

The affirmation of the ratings is primarily driven by growing enrollment and sound finances supported by multiyear planning and conservative budgeting. The district's robust local economy, strong resident income, and property wealth will continue to support its strong financial position. Enrollment is expected to experience consistent annual growth of at least 1% for the next two to three years due to favorable demographic trends and competitive course offerings.

Key Takeaways:

  • The Aa3 issuer rating reflects the district's robust local economy, strong resident income, and property wealth.
  • The rating also incorporates the district's sound finances, which will remain solid due to enrollment-based revenue growth and conservative budgeting.
  • The district's increasing leverage and fixed costs are reflected in the rating, with a fixed cost ratio of 18% of operating revenue and a leverage ratio of 328%.
  • The Aa2 rating on the district's GOULT bonds is one notch higher than the district's issuer rating due to California school district general obligation bond security features.
  • The SFID 1's Aa3 rating is the same as the district's issuer rating, considering the California school district GO bond security features and the smaller tax base compared to the overall district.
  • The stable outlook reflects the likelihood that enrollment will remain positive and management will continue to maintain reserves and liquidity at sound levels.
  • Factors that could lead to an upgrade of the ratings include a substantial increase in operating reserves to around 25% of operating revenue, continued enrollment growth approaching a 2% CAGR, and significant reduction in long-term liabilities to below 250% of revenue.
  • Factors that could lead to a downgrade of the ratings include a material decline of operating reserves to below 15% of revenue, significant enrollment losses, and sustained increase in long-term liabilities to above 400% of revenue.
  • The district serves the City of Roseville and certain unincorporated areas of Placer and Sacramento Counties, covering approximately 72 square miles, with an estimated enrollment for fiscal 2025 of about 11,005 students.

Statistics:

  • The district has a total debt outstanding of approximately $291.2 million post-issuance.
  • The district's estimated enrollment for fiscal 2025 is about 11,005 students.
  • The district's robust local economy has a strong resident income of 139% of the US median.
  • The district's property wealth is $202,000.
  • The district's fixed cost ratio is 18% of operating revenue.
  • The district's leverage ratio is 328%.
  • The SFID 1's tax base is significantly smaller compared to the overall district's tax base.
  • The district and SFID 1 operate together under the school district's administration and governing board.
  • The district's total debt outstanding post-issuance is approximately $291.2 million.

Sources:

  • Moody's Ratings, "Roseville Joint Union High School District, School Facilities Improvement District No. 1, City of Roseville, Placer and Sacramento Counties, CA"
  • Moody's Investors Service, "Moody's Ratings"