LOS ANGELES Moody's Investors Service lowered the rating on one California school district and confirmed the ratings on eight other districts, all of which the state department of education recently identified as financially distressed. The rating revision and confirmations are described in Moody's fifth annual report on the credit quality of California school districts, scheduled for release today.
Moody's dropped its rating on $44.8 million of Alameda Unified School District general obligation bonds to A from A1 because of "financial strain relating to one-time buyouts of teacher positions," Diane R. Gatewood, a Moody's assistant vice president, said Friday. The rating change on the Alameda, Calif., district was made Aug. 10.
However, Gatewood added. "our analysis found that no rating action was required" on eight other districts with Moody's ratings that the education department said were experiencing financial travails.
The other districts and their confirmed ratings are: ABC Unified School District in Los Angeles, rated A1; Alum Rock Union School District, Santa Clara, A; East Side Union High School District, Santa Clara, A1; Oakland Unified School District, Alameda, Baa; Orange Unified School District. Orange, A; Pajaro Valley Unified School District, Santa Cruz, Baa; Templeton Unified School District, San Luis Obispo, conditional A; and, William S. Hart Union High School District, Los Angeles, A1/Aaa.
Moody's rates about 200 California districts, and, overall, they have "maintained their credit quality" since the rating agency's previous comprehensive district study released in February 1993, said Moody's assistant vice president Ronald L. Junket, who co-wrote the schools report with Gatewood.
"The maintenance of credit position in light of financial strain reflects the general quality of district management and the positive impacts of Assembly Bill 1200," a 1992 law which strengthened oversight of districts by county and state officials, the Moody's report said.
The 1992 legislation requires the state department of education to identify financially distressed school districts. The department releases a list of distressed districts twice a year; the state's 1,000 districts are categorized into negative, qualified, or positive groups.
For the 1994 fiscal year, which ended June 30, the names of nine districts rated by Moody's were on the department's list of districts with either negative or qualified certifications in either the first reporting period, the second period, or both.
Three of the districts rated by Moody's were listed in both the first and second periods as having negative or qualified certifications. Four of the Moody's-rated districts were listed with negative or qualified certifications in the first period only; two of the districts were listed in the negative or qualified category for the second period only.
Moody's said the most significant development for districts since its last schools report 18 months ago is the adoption of the state's budget for fiscal 1995, which began July 1.
Compared with other local governments in California, school districts fared well in the fiscal 1995 budget process, Moody's said.
"Public education has fared reasonably well in recent years" because of state constitutional provisions mandated by Proposition 98, approved by voters in 1988. The measure guarantees minimum funding levels per student.
Education funding has been maintained at a constant level since fiscal 1992, with kindergarten to 12th grade schools scheduled to receive an average of $4,199 per student for fiscal 1995, Moody's said.
By maintaining schools' funding, the state is "sheltering public education from the degree of funding reductions which have been placed on other government entities," Moody's said.
