TEXT-Fitch affirms Regional School District 12, Conn. GOs at 'AA+'

Thu Jan 31, 2013 11:07am EST

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Jan 31 - Fitch Ratings has affirmed the following unlimited tax general
obligation (GO) bonds for the Regional School District No. 12, CT (the
district):

--$100,000 GO bonds, series 1993, at 'AA+';
--$400,000 GO bonds, series 2000, at 'AA+'.

The Rating Outlook is Stable.

SECURITY

The bonds are a general obligation of the district and of the member towns of
Washington, Roxbury, and Bridgewater, CT. The district has no independent taxing
power, but the member towns have the ability and obligation to levy property
taxes without limit to meet this general obligation.

SENSITIVITY/RATING DRIVERS

RATING RELIES ON MEMBER TOWNS' CREDIT QUALITY: The 'AA+' rating reflects the
high wealth levels, strong financial flexibility and low debt levels of each of
the member towns.

GOOD COOPERATION AMONG TOWNS, DISTRICT: The member towns' sound financial
positions support balanced district operations. School expenditures represent
the majority of town spending; historically strong cooperation between the
member towns and the district has resulted in overall town support for the
annual district budgets.

LIMITED DISTRICT FINANCES OFFSET BY TOWN SUPPORT: The district's operations are
tightly balanced, and state statutes limit the extent of the district's
reserves. However, Fitch believes the financial flexibility provided by spending
flexibility and the potential for mid-year assessments from the town offsets
these concerns.

STRONG ECONOMIC PROFILE: District economic indicators are strong, wealth levels
are very high, and unemployment rates are well below state and national levels.

LOW DEBT BURDEN: District debt levels are low with rapid debt amortization and
limited future debt needs. Total expenditure levels associated with debt
service, pension contributions, and other post-employment benefit (OPEB)
payments are manageable.

CREDIT PROFILE:

The district, formed in 1967, is located northeast of Danbury (GO bonds rated
'AAA' by Fitch) and west of Waterbury (GO bonds rated 'A+' by Fitch) and
consists of three small, wealthy towns - Washington, Roxbury, and Bridgewater.

STRONG SOCIOECONOMIC PROFILE

The district serves K-12 students and owns and operates the Shepaug Valley
Middle/High School and operates three elementary schools under lease agreements
with its member towns. The district's estimated population is 7,895, up 4.5%
from 2000, but student enrollment has been declining with its current level at
931 students, down from 1,161 in 2004. Enrollment is projected to continue to
decline due to the aging population. The member towns are primarily residential
and exhibit high wealth levels by all measures. Unemployment levels are below
state and national levels.

SOUND FINANCIAL MANAGEMENT

The district derives approximately 91% of its general fund revenues from its
assessments charged to member towns proportionately, based on the number of
enrolled students. State statutes require surpluses to be either refunded or
credited to member towns, or reserved for capital expenses, sick and severance
costs, or OPEB, thus limiting the extent of overall district reserve levels. As
a result, the district reported a fiscal 2012 general fund unrestricted balance
(the sum of unassigned, assigned, and committed fund balances under GASB 54) of
$192,229 or 0.8% of expenditures and transfers out.

If any member town fails to budget for its assessment to the district, the
regional school board may petition the superior court to determine the alleged
deficiency and order such town to pay its assessment, plus an additional 25% to
the district as soon as it is available. By not paying its assessment a member
town would suffer the future withholding of state aid to pay for default and its
obligation for debt service does not go away if it withdraws from the district.

The district has been active in controlling spending to maintain balanced
budgets. The fiscal year 2013 budget represented an increase of about 0.46% from
fiscal 2012, and included increased spending in the areas of property and
program improvements of approximately $245,000. The district's intent is to use
these funds to increase technology access and to comply with the state's
initiative to evaluate students through a computerized process.

The strong financial position of the three member towns supports district
financial balance. The towns' operations through fiscal 2011 each feature over
15% of unrestricted general fund balances as a percentage of spending, strong
taxpayer collection rates, diversified tax bases, and ability to raise property
taxes if needed. In addition, good cooperation between the district and member
towns, is demonstrated by annual support for district budgets. The member towns
have approved the budget on the first try for the past several years.

LOW DEBT BURDEN

Overall debt levels are low with debt per capita at $403 and debt to fiscal 2011
taxable assessed value at 0.1%. These ratios include a $2.5 million GO private
bank loan issued in 2012 to refinance bond anticipation notes (BANs) issued for
school building repairs and improvements. The district has no future debt plans.

PENSION AND OPEB MANAGEABLE

The district administers a single-employer, non-contributory, defined benefit
plan and has historically contributed greater than 100% of its annual required
contributions (ARC). The contribution in fiscal 2012 totaled $258,583, which was
equal to 122% of the ARC and 1.1% of general fund spending. As of July 1, 2012,
the plan was 95% funded using a 7% discount rate assumption. The unfunded
actuarial accrued liability for the plan was $211,009. The district did not
contribute to OPEB in fiscal 2012 as it only offers an implicit rate subsidy.

Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

In addition to the sources of information identified in Fitch's Tax-Supported
Rating Criteria, this action was additionally informed by information from
Creditscope, University Financial Associates, S&P/Case-Shiller Home Price Index,
IHS Global Insight, and the National Association of Realtor.

Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria' (Aug. 14, 2012);
--'U.S. Local Government Tax-Supported Rating Criteria' (Aug. 14, 2012).

Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria
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