Moody's Upgrades Sumter School District's Ratings to A2 and A3

Strategic Insights -

Moody's Investors Service has upgraded Sumter School District, SC's issuer rating to A2 from A3 and lease appropriation ratings to A3 from Baa1, citing the district's expanding tax base, multiple years of operating surpluses, and manageable leverage. The upgrade is driven by the district's growing local economy, stable resident incomes, solid finances, and manageable long-term liabilities. With approximately $68.1 million in debt outstanding, the district's strong fund balance reserves and manageable leverage have been key factors in the rating upgrade.

Key Takeaways:

  • Moody's has upgraded Sumter School District's issuer rating to A2 from A3, driven by the district's expanding tax base and operating surpluses.
  • The district's lease appropriation ratings have also been upgraded to A3 from Baa1, reflecting the risk of annual non-appropriation.
  • The district has approximately $68.1 million in debt outstanding, with long-term liabilities representing around 203.5% of revenue.
  • The district's fund balance reserves are strong at around 30% of revenue, driven by state aid and property tax revenues.
  • The district plans to spend down roughly $6 million for routine maintenance and capital projects, resulting in small deficits in fiscal 2025 and fiscal 2026.
  • Despite the drawdown, the district's reserves will remain strong at 28% of revenue.
  • The A3 lease appropriation rating reflects the risk of annual non-appropriation, but is partially mitigated by the more essential nature of the financed and pledged assets.
  • The district's enrollment for the 2023-2024 school year is approximately 13,600 students.

Statistics:

  • $68.1 million: The district's debt outstanding.
  • 203.5%: The ratio of long-term liabilities to revenue.
  • 30%: The district's fund balance reserves as a percentage of revenue.
  • $6 million: The amount the district plans to spend on routine maintenance and capital projects.
  • 28%: The district's reserves as a percentage of revenue in fiscal 2025 and fiscal 2026.
  • A2: The upgraded issuer rating.
  • A3: The upgraded lease appropriation rating.

Sources:

  • Moody's Investors Service news release
  • US K-12 Public School Districts published methodology, July 2024, https://ratings.moodys.com/rmc-documents/425431
  • Moody's Rating Methodologies page, https://ratings.moodys.com