Moody's Investors Service has affirmed the speculative grade rating on a lease financing for the troubled Coachella Valley Unified School District, despite a recent state bailout of the district.
In May, the state gave a $7.3 million emergency loan to the district for cash flow needs and appointed a trustee to oversee district operations. Moody's said that though the trustee will assume all legal rights and powers over Coachella, the district is not seeking bankruptcy protection. Last year, the Richmond Unified School District filed for bankruptcy and defaulted on an outstanding certificates of participation issue.
"Coachella is not another Richmond," said Barbara J. Flickinger, vice president for Moody's. "We're certainly assuming that the state will manage the district and honor all debt service payments."
Coachella is the first school district in California to utilize state legislation passed last year, AB 1200, that calls for the state to appoint a trustee for any district that accepts an emergency loan of more than twice its recommended reserves. State Superintendent of Education Bill Honig has appointed Andy Viscovich, with more than 30 years of experience, to run the Coachella district.
Moody's confirmed the Ba rating on the district's 1985 equipment COP financing, of which $405,000 is outstanding. The district has $7.8 million in other outstanding lease debt that is unrated.
