Despite Downgraded Bond Rating, New School Plan Moves Forward

Earlier this month, bond credit rating agency Moody’s downgraded the Bristol Township School District’s bond rating. By the actions taken at the most recent school board meeting, it did not appear to slow down plans for a district facilities overhaul.

At last week’s board meeting, Superintendent Dr. Samuel Lee and Board President Angela Nober both said the downgraded rating would have little impact on the district and their borrowing capability.

The board discussed the matter before they approved a General Obligation Bond Parameters Resolution, which enables the superintendent and board president to approve a bond purchase agreement. According to the resolution, the maximum allowed bond is $135 million with a maximum interest rate of 6 percent. Officials said the bond that will be used is expected to be closer to $120 million with a interest rate just under 5 percent. The amount depends on the market.

Edward Murray of Boenning and Scattergood, the district’s bond underwriters, said that the resolution did not mean the board was obligated to take out a bond. He said it just gives top leaders authorization to move forward.

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Board member Helen Cini said the impact on seniors with fixed incomes like herself would be most impacted by tax increases that could come from the $152 million building project.

“I feel for all the senior citizens of this township,” she said before voting against the resolution.

During public comment, John Riotto of Croydon said the board approving the resolution would be in bad taste, considering most are on a limited income.

While many district officials said the schools project will not increase taxes. It was noted that other factors could lead to increases.

Board member Jim Baker said taxes will increase even more if the district’s nine elementary schools are no closed and replaced with three new, bigger schools.

Fellow board member Constance Moore agreed with Baker.

“It’s killing us to keep these nine schools,” she said. “We can not afford to keep these nine schools.”

At one point, Moore called the aging schools “raggedy.”

There were also concerns about how the reduced bond rating from Moody’s would impact the district getting bond money.

Moody’s recently announced have assigned the district with a A1 underlying rating with an outlook an outlooks that is negative and a A1 enhanced rating with a stable outlook.

Murray said the rating downgrade was “very small” and would “not significantly impact borrowing rates.”

Moody’s said in a press release that the downgrade was because the school system “significantly narrowed the district’s fund balance reserves and liquidity and opened up a widening budgetary structural imbalance. The rating also reflects the district’s moderately-sized tax base, average wealth levels, an above average debt position.”

In June, the district had to use a significant portion of it’s reserve account to balance the budget.

More from Moody’s:

The negative outlook reflects the considerable challenges the management team faces to regain structural balance, avoid further draws on fund balance, and restore reserves to adequate levels. Narrowed reserve levels limit the district’s ability to offset potential future budget variations, and future rating reviews will consider management’s ability to successfully implement a plan to achieve and sustain structural balance, as well as increase financial flexibility.

Lee said the district is on the “ultimate path to financial health.”