Kent School District Bond Rating Upgraded - Stable Financial Outlook
On February 21, 2021, Moody’s Investor Service upgraded the bond rating for Kent School District (KSD) from A1 to Aa3. The rating outlook was revised from positive to stable, which is a higher rating.
The upgrade of the KSD financial outlook to stable by Moody’s is a formal acknowledgment by the rating agency that the District is on firm financial footing. What was most noteworthy, however, was the language used in the review.
“Although enrollment is declining with a significant drop in fiscal 2021 due to the corona virus pandemic, management has demonstrated its ability to address challenging financial situations and deliver strong results.” Moody’s Investors Service Press Release The stable outlook assigned to KSD reveals a “strong management team that is expected to continue to deliver long-term structural balance and maintain manageable levels of long-term balance sheet leverage.” Moody’s Investors Service Press Release
After a challenging year, the financial decisions made under the leadership of Superintendent Dr. Calvin J. Watts and the KSD Board of Directors have led to a strong credit rating and a stable financial outlook for the District.
A higher bond rating means a stable financial position.
The newly assigned higher rating reflects the District’s general credit quality and ability to repay debt. This is due to the District’s solid financial position with an “extraordinarily strong management team that substantially increased the District’s fund balance in 2019 and 2020.” Moody’s Investors Service Press Release The rating also incorporates the District’s participation in the Puget Sound economy, with its above-average resident income.
A bond rating is much like a personal credit rating.
Bond ratings are a simple concept. School districts constructing schools are essentially no different from most public members who want to build a home – they need to apply for a loan from a bank. And anybody applying for a loan will soon learn that credit history matters.
In a school district review, a rating agency will establish an underlying credit rating (like your personal credit score) and also assign an outlook based on whether they perceive financial conditions to be getting better or worse.
As we move forward, a higher rating enables KSD to have a stable outlook.
Although KSD is now on firm financial footing, the effects of COVID-19 pandemic and its costs are still largely unknown. This stable financial outlook will help Kent School District as it faces these possible future challenges. We will continue to work hard to maintain and improve our bond rating to ensure a positive, stable financial outlook for the Kent School District.