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New York, August 17, 2022 — Moody’s Investors Service has assigned a Aaa rating to Cook County School District 25 (Arlington Heights), IL’s $55 million General Obligation School Bonds, Series 2022. Concurrently, Moody’s has affirmed the district’s Aaa issuer rating and Aaa rating on outstanding general obligation limited tax (GOLT) debt. The issuer rating represents the district’s ability to repay debt and debt-like obligations without consideration of any pledge, security, or structural features. Following the sale, the district will have about $92.5 million in general obligation debt outstanding. A stable outlook has been assigned.
RATINGS RATIONALE
The Aaa issuer rating reflects the district’s large and appreciating tax base located favorably in the Chicago metro area. Reserves are strong and leverage and fixed costs are below average due in part to state support for contributions to an underfunded teacher retirement system.
The Aaa general obligation unlimited tax (GOULT) rating is equivalent to the issuer rating based on the district’s general obligation full faith and credit pledge as well as an unlimited property tax that is dedicated to debt service.
The absence of a distinction between the Aaa GOLT rating and the issuer rating is based on a broad all available funds pledge, with debt service supported by a dedicated tax levy unlimited as to rate, though limited in amount by the district’s debt service extension base (DSEB).
RATING OUTLOOK
The stable outlook reflects the expectation that the district will maintain its strong financial position and below average long-term liabilities.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
– Not applicable
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
– Tax base contraction
LEGAL SECURITY
The district’s GOULT bonds are backed by its pledge and authorization to levy a property tax unlimited as to rate or amount to pay debt service.
Debt service on the district’s GOLT bonds is backed by the district’s pledge of all available funds and supported by a dedicated property tax levy that is unlimited as to rate, but limited in amount by the district’s DSEB which is currently $5.5 million.
USE OF PROCEEDS
Proceeds from the Series 2022 bonds will finance capital improvements and additions at district facilities including construction of new classrooms for full-day kindergarten.
PROFILE
Cook County School District 25 (Arlington Heights), IL is located in northeast Illinois (Baa1 stable) about 25 miles from downtown Chicago (Ba1 stable) and serves the Village of Arlington Heights (Aa1) and portions of the Village of Mount Prospect, the City of Prospect Heights (Aa3) and the City of Rolling Meadows. The district provides early childhood programing and kindergarten through eighth grade education at seven elementary schools and two middle schools. Enrollment for all programing in fiscal 2022 was about 5,300 and total population within the district is estimated to be about 50,000.
METHODOLOGY
The principal methodology used in these ratings 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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Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating.
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