District receives S&P upgrade to share highest rating for school districts in the state
The Lake Washington School District locked in a savings of over $17.3 million on May 14 by lowering the interest cost on $167.8 million of its debt through issuing refunding bonds.
The District recently received a Standard & Poor’s (S&P) Rating Services upgrade from ‘AA’ to ‘AA+’ for its existing debt and for the Unlimited Tax General Obligation Refunding Bonds, 2015. The rating has a stable outlook. The refunding bonds were priced by the District’s bond underwriters May 14. Moody’s Investors Service (Moody’s) assigned its highest possible rating, ‘Aaa,’ to the bonds.
Dr. Traci Pierce, superintendent, said, “One of our goals is to use resources effectively and be fiscally responsible. We seek these kinds of opportunities to save taxpayer dollars.”
S&P stated the upgraded rating reflects their view of the Lake Washington School District’s
· Large and growing tax base;
· Good financial management practices, including multi-year financial forecasting and a long-term capital plan;
· History of voter support for supplemental operating and capital levies;
· Strong available reserves that are likely to remain strong for the next few years; and
· Low debt, relative to the tax base.
The ‘AA+’ rating is the highest rating assigned by S&P to any school district in the state. It is shared by only three districts: Bellevue, Issaquah, and now Lake Washington. S&P rates the State of Washington, which is the main source of funding for school districts, ‘AA+’ as well.
Moody’s assigns its highest possible rating of ‘Aaa’ to the District’s UTGO debt, based on the large tax base, strong wealth levels and structurally balanced financial operations. Lake Washington is one of five districts in the state to attain this elite credit rating. The others are Seattle, Mercer Island, Bellevue, and Issaquah.
The District’s very strong credit ratings contributed to low interest rates of 2.22% when the District’s bond underwriters marketed and priced the refunding bonds.
The bonds refunded $31.265 million of the District’s UTGO Refunding Bonds, 2004 and 2004B, and $136.5 million of the District’s UTGO Bonds, 2006 and 2007.
Barbara Posthumus, Director of Business Services for the District, said, “It is our goal to prudently manage the resources our community has entrusted us with. Refinancing debt at lower interest rates has helped achieve that goal. Our timing in the market was very good, resulting in net savings of over $17.3 million in lower debt service between now and 2025.”