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New York, September 02, 2022 — Moody’s Investors Service has assigned a Aa2 to Cook County School District 106 (La Grange), IL’s $13.6 million General Obligation Limited Tax School Bonds, Series 2022A. Moody’s maintains the Aa2 issuer rating and the Aa2 general obligation limited tax (GOLT). The issuer rating represents Moody’s assessment of hypothetical debt of the district supported by a general obligation unlimited tax (GOULT) pledge though the district does not currently have any outstanding GOULT debt. Following the sale, the district will have $16.7 million GOLT debt outstanding.
RATINGS RATIONALE
The Aa2 issuer rating incorporates the district’s positive enrollment trend and above average resident incomes that are supported by employment opportunities in the Chicago (Ba1 stable) metro area. The district has a history of maintaining strong financial reserves which is expected to continue despite planned draws over the next few years for capital. Leverage is low relative to the national median, but above average for similarly rated school districts in Illinois. The district is exposed to contingent risk associated with reliance on the state for a poorly funded Teachers Retirement System.
The lack of rating distinction between the issuer rating and the GOLT debt service extension base (DSEB) debt rating reflects the nature of the pledge which is a first budget obligation payable from all available funds.
RATING OUTLOOK
Moody’s does not typically assign outlooks to local governments with this amount of debt.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING
– Continued positive enrollment trends that lead to growth in the size of operations paired with maintenance of reserves
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING
– Tax base contraction
LEGAL SECURITY
The district’s GOLT bonds are backed by an all-available funds pledge. The district’s GOLT debt also benefits from a dedicated property tax levy, unlimited as to rate but limited as to the district’s Debt Service Extension Base, which is about $1.2 million assuming no annual growth.
USE OF PROCEEDS
Proceeds from the Series 2022A bonds will finance library renovations and a ten classroom addition at district facilities.
PROFILE
Cook County School District 106 (La Grange) is located in western Cook County (A2 positive) about 25 miles west of downtown Chicago (Ba1 stable) and serves residents of portions of the Highlands area of La Grange (Aa2), Indian Head Park, Western Springs (Aa2) and Countryside (Aa2). The district operates one elementary school and one middle school that enrolled just under 1,000 students in the 2021- 2022 school year.
METHODOLOGY
The principal methodology used in this rating was US K-12 Public School Districts Methodology published in January 2021 and available at https://ratings.moodys.com/api/rmc-documents/70054. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the issuer/deal page for the respective issuer on https://ratings.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235.
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