Wall Street Firm: School Finances Are Good And Not So Good
BY BUDDY NEVINS
Broward Public Schools financial picture is both good and not so good, according to Moody’s Investors Service.
The service assigned an A1 rating to $268.7 million in Certificates of Participation (COPs), Series 2015A. That’s the same rating as the rest of the school’s $1.6 billion in outstanding COPs hold.
And its the same rating that recent Miami-Dade School Board COPs have been given by Moody’s. The Wall Street rating service congratulated Miami-Dade for its “strong management team,” an observation that was not made when analyzing Broward’s debt.
COPs have been used by Broward (and other governments across the country) largely because they don’t require approval of the voters. COPs don’t need a referendum because they require a School Board to vote to repay them every year from the existing revenue streams.
The recent $800 million in bonds added to the revenue by increasing the millage. That’s why those bonds needed voters approval.
The COPs rating announced last week is worse by one grade than the Aa3 rating on the district.
Aa3 is the lowest of the high-grade ratings. A1 is the highest of the upper medium grade.
Moody’s says the school system’s “stable outlooks reflect the slowly improving economy, expected financial improvement, and the sizable and diverse tax base.” It applauded the recent passage of the $800 million bond issue as “a positive credit factor given the district’s sizable short and long term critical capital needs.”
Now the not so good news:
The system “challenges” over its “ability to maintain an adequate level of reserves as budget pressures,” which persist and its continued “sizable capital needs.” Moody’s warns the rating would go down if there is “further financial deterioration” and continued “inability to adequately fund capital needs.”
Broward’s rating would improve if it had an “improvement in district cash and reserves” and “long-term capital funding sources and adequate funding of capital needs,” according to the rating service.
The take away: Moody’s believes Broward taxpayers need more debt to repair and replace deteriorating schools.
That’s no surprise.
Superintendent Robert Runcie has warned repeatedly that the $800 million in new bonds would only cover about one-third of the needed modernization.
December 15th, 2014 at 6:43 pm
The Florida Lottery was approved by voters only because they were told that the proceeds would be used to fund K-12 education above and beyond the normal level of education funding. Then the “normal” level of funding got shredded and lottery money was effectively stolen to fund other programs, leaving K-12 education forlornly holding the empty bag.
Give K-12 education its normal funding level back and then the lottery proceeds on top of that, as voters were promised, and Moody’s will very quickly advance school bonds statewide to its very highest rating.
December 16th, 2014 at 4:57 am
Mr. Nevins, I understand you want efficient government that helps people, but since NO BANKER IN HIS RIGHT MIND WOULD SEND HIS CHILDREN TO A PUBLIC SCHOOL IN BROWARD COUNTY, or ANYONE ELSE WITH MONEY, NO ONE CARES ABOUT THE SCHOOLS any more than the “public” hospitals or any other “public” service like buses in Broward County. People with money, i.e. Whites except the elderly or sick or those with no education, couldn’t care less. You see it on the School Board and on the County Commission. AND YOU SEE IT IN ELECTIONS where every piece of crude trash gets elected and RARELY IF EVER A DECENT PERSON RUNS, let alone GERTS ELECTED! The Financial Status of Bonds, yes, in an educated middle class or upper class county it would matter, but IN SOUTH FLORIDA? IN BROWARD COUNTY? The only thing about Bonds or Finance people care about is HOW DO I GET MY CUT!!!!!!!
December 16th, 2014 at 11:00 am
By the time the schools pay off these loans, they will need more money. It will never end.
December 16th, 2014 at 7:05 pm
At the last school board meeting, a new position was brought forward (agenda item CC-6) to be funded with bond money. I think it was tabled. Is this the first promise broken?