LOS ANGELES - The Los Angeles Unified School District learned this week it will lose its top finance official, but rating agencies do not see any credit implications from the move even as they continue to assess the troubled district's debt.
Robert Booker, chief business and financial officer, announced he will resign on Dec. 31. Booker, 62, said he is leaving the district to become auditor-controller of San Diego County.
Booker's departure should not have rating implications for the district, in large part because its governing board seems committed to the policies he promoted, said Diane Schenkman, an assistant vice president at Moody's Investors Service. "That's not a major concern for us from a rating perspective," she said.
But she said his departure still poses a challenge for the district, a view also voiced by officials at other agencies.
"It's always difficult when someone of that caliber leaves a position," said Amy Doppelt, a vice president at Fitch investors Service. She added that the district benefited from Booker's "experience, skills, and temperament."
"He is a very strong manager there," agreed Katherine Evans, a director at Standard & Poor's Corp.
In a press conference, Booker cited a "personal plan" to slow down as his reason for switching jobs. He said the change will relieve the stress and long hours associated with serving as financial head of the nation's second-largest school district.
Booker and other district officials faced particular difficulties in recent years, including the challenge of closing a $400 million shortfall in the current fiscal year. Officials at a teachers union have sharply criticized the district generally, and Booker specifically, for recently imposing 12% teacher pay cuts to help close the shortfall.
Accordingly, a top union official this week welcomed Booker's departure even as district officials lamented his resignation.
District officials so far have warded off legal challenges from the teachers aimed at reversing the pay cuts. That battle has particularly captured the attention of rating agency officials and investors.
The district has $450 million of tax and revenue anticipation notes outstanding and $217.2 million of certificates of participation.
Moody's rates the COPs either A or conditional A. Standard & Poor's rates them A-plus or provisional A-plus, and has the COPs on CreditWatch with negative implications. Fitch rates the certificates A-plus.
Schenkman said Moody's expects to complete its review of the district's financial situation "in very early January."
Evans said Standard & Poor's is "in the process of working through the analysis, " adding that "I really don't know at this point" when a rating decision might be forthcoming.
"It's hard to say at this point because things are still up in the air," said Doppelt of Fitch. "We're still reviewing the situation" after closely monitoring the district for months because of concern over state funding levels and negotiations with teachers over pay cuts.
Booker recently met with officials at all three agencies and said in an interview this week that "I felt the meetings went very well."
California's financial condition was "a major concern" raised by the agencies because state funding is a primary source of district revenues, Booker said.
Booker said he stressed to the rating agencies that school districts constitutionally have first call on state funds. He also noted that the governor and Legislature have expressed a desire to maintain school funding at current levels in the next fiscal year.
In a further effort to save money, the district's board this week approved shortening the spring semester by eight days. But that move drew growing criticism Wednesday from state officials when they learned that furloughed district employees would qualify for benefits through a state compensation program.
California approved a waiver this fall to let the district shorten its school term, but state education officials apparently were unaware that workers could claim the state furlough benefit.
The controversy again highlights the difficulties school districts face in adjusting to a financial pinch. Booker has previously noted that salaries and benefits are the main area for adjustments because they account for most of the district's costs.
