Fitch Rates Broward County School Board Leasing Corp., FL COPS 'A+'; Outlook to Negative

NEW YORK--(Business Wire)--
Fitch Ratings assigns an 'A+' rating to the Broward County School Leasing Corp.,
FL's approximately $133 million certificates of participation (COPs), series
2009A. The COPs are scheduled to sell June 2nd and are expected to be divided
into three subseries:

--$19 million in tax-exempt COPs;

--$64 million in Build America Bond (BABs) COPs;

--$50 million qualified school construction bond (QSCBs) COPs.

Proceeds will be used to fund general district capital needs. Concurrently,
Fitch affirms the district's approximately $1.9 billion in outstanding COPs at
'A+' and the implied general obligation (GO) bonds at 'AA-'. The Rating Outlook
is revised to Negative from Stable.

The 'A+' rating is based on the strong legal features of the master lease
structure as well as the district's low debt levels and diverse economy. The
Negative Outlook reflects the district's recent financial volatility, structural
imbalance, and pressured capital maintenance. Fitch believes that Broward, like
all Florida school districts, may face substantial state revenue reductions over
the next few years, further pressuring the district's current slim financial
margins. While the district is in the process of developing a multi-year plan
which would restore structural balance and strengthen reserve levels, results
notably weaker than expected would put downward pressure on the rating.

The COPs are secured by lease payments made by the district to the trustee, as
assignee of the Broward County School Board Leasing Corp., which is a
not-for-profit corporation created to assist the district in lease-purchase
financing. The obligation of the district to make lease payments is limited and
payable solely from funds appropriated by the district from available revenues.
The 2009A COPs are being issued pursuant to a master lease agreement, which
provides strong incentives for appropriation. In the event of non-appropriation,
the board must surrender all leased facilities to the trustee. The district has
elected to receive a refundable credit from the federal government equal to 35%
of the BABs basic lease payments' interest. Annual sinking fund payments are
scheduled for the BABS to create synthetic level debt service. Due to a
projected time differential between sinking fund payments and when the district
will receive the credit, the district plans to use the credit to pay a portion
of the following year's sinking fund payment.

Located on the southeast coast of Florida and containing the city of Fort
Lauderdale, Broward County is among the most populated in the nation. The school
district, which is coterminous with the county, has the second largest student
enrollment in the state and the sixth in the nation, although enrollment has
declined in recent years. Broward County, rated 'AA+' by Fitch, has a robust
economy with services, government, and trade sectors accounting for the largest
components of the employment base. As in many areas, the unemployment rate has
increased over recent months to 8.5% in March 2009 from 4.3% a year earlier,
although it remains below the state and national averages. Meanwhile, data
indicates foreclosure rates are double the national average. However, Fitch
believes the diversity and solid foundation of the county's economy will allow
it to withstand the current economic downturn while remaining strong.

The district's financial position has shown weakening recently with operating
deficits in three out of the last four audited years largely due to mid-year
cuts in state aid. While an effective expenditure reduction plan resulted in a
$17 million surplus in fiscal 2008, unreserved fund balance as a percent of
spending decreased to 4.4% due to an increase in encumbrances. Current fiscal
2009 projections show a $31 million operating deficit partially due to $36
million in state aid that was held back in the middle of the year. While the
district largely offset this reduction through a $23 million transfer from the
self- insurance fund, which increased the district's structural imbalance, the
district made a policy decision not to amend expenditures mid-year. Based on
current projections, unreserved fund balance levels at the close of fiscal 2009
will decrease to roughly 3.5% of spending, minimally within the district's fund
balance policy floor of 3%. Fiscal 2010 projections show a $14 million budget
gap that the district is working on closing and has stated that it is committed
to maintaining its current fund balance levels. The district also has the
ability to levy an additional 1/4 mill, which could be used for operations or
capital needs, with a super-majority vote of the board. The levy would need
voter approval if it were to continue beyond one year. Additionally, the
district is preparing a five-year plan which would restore structural balance
and increase total fund balance to the district's goal of $100 million. Fitch
would view the approval and implementation of this plan positively although it
finds the plan's projections optimistic.

Overall debt is low with average amortization. However, with this issuance the
district will be required to levy a high 0.92 mills of its capital outlay
millage for COPs debt service payment and is expected to increase this to 1.09
mills for fiscal 2010 due to declining assessed value. While the district has
minimal borrowing plans over the next few years, general maintenance needs may
be stressed as the district will have limited excess capital outlay millage to
fund non-debt service expenditures. The district's projections for its new
five-year capital improvement plan (CIP) through fiscal 2015 total $1.5 billion,
roughly half the total of previous plans, with $1 billion of revenue being
generated by the capital outlay millage.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, New York
Rachel A. Barkley, 212-908-0514
Amy R. Laskey, 212-908-0568
or
Media Relations:
Cindy Stoller, 212-908-0526
Email: cindy.stoller@fitchratings.com

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