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Moody's Investors Service Inc.

Moody's Upgrades Gobles Public Schools, MI's Debt Ratings to A1

Strategic Insights

— 2 min read

Moody's Investors Service has upgraded Gobles Public Schools, MI's issuer and general obligation unlimited tax (GOULT) debt ratings to A1 from A2, citing substantial improvements in the district's financial reserves and enrollment. The district's $17.8 million 2025 School Building and Site Bonds, Series II (General Obligation - Unlimited Tax) have been assigned A1 underlying and Aa1 enhanced ratings. The ratings were upgraded due to the district's improved financial profile, which is expected to remain solid over the next few years with plans for modest surpluses.

Key Takeaways:

  • The district's financial reserves and enrollment have substantially improved, leading to the upgrade of their issuer and GOULT debt ratings to A1 from A2.
  • The district's financial profile will likely remain solid over the next few years with plans for modest surpluses in fiscals 2025 and 2026.
  • The district has no future borrowing plans, which is expected to moderate the long-term liabilities ratio.
  • The resident income ratio of 97% is about the median for the rating category, while full value per capita of nearly $148,000 is above the median.
  • The Aa1 enhanced rating on the current bonds reflects the additional security provided by the Michigan School Bond Qualification and Loan Program (SBQLP).
  • The State of Michigan's Aa1 Issuer Rating provides a constitutional obligation to provide a qualified school district with sufficient funds to make timely debt service payments, if necessary.
  • The district's fixed costs ratio will increase to around 18% due to the new issuance, but will remain within the rating category's acceptable range.
  • The district's three-year CAGR was positive 2.4% in 2024 and is expected to remain stable as the district attracts new families.
  • The district's $31.6 million in GO debt will enable them to maintain existing balances and continue to provide quality education to their students.
  • The district's rating is tempered by an above-average long-term liabilities ratio of about 330%, which is likely to moderate.

Statistics:

  • The district's debt-to-revenue ratio is expected to be around 20% in fiscal 2025, within the rating category's acceptable range.
  • The district's resident income ratio is 97%, about the median for the rating category.
  • Full value per capita is nearly $148,000, above the median.
  • The district's fixed costs ratio will increase to around 18% due to the new issuance.
  • The district has no future borrowing plans, which is expected to moderate the long-term liabilities ratio.
  • The district's enrollment has substantially improved, with a three-year CAGR of positive 2.4% in 2024.

Sources:

  • Moody's Investors Service, "Moody's Ratings Upgrades Gobles Public Schools, MI's issuer and general obligation unlimited tax (GOULT) debt ratings to A1 from A2" (2024)
  • Moody's Investors Service, "US K-12 Public School Districts" (2022)
  • Moody's Investors Service, "Guarantees, Letters of Credit and Other Forms of Credit Substitution Methodology" (2022)
  • Moody's Investors Service, "Rating Methodologies" (n.d.)

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