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Updated Santa Monica-Malibu School District Credit Ratings to Save Taxpayers $10 Million
By Jorge Casuso
August 31, 2018 -- The Santa Monica-Malibu Unified School District got a boost from the nation's top credit agencies as it prepares to place a record $680 million in bonds on the November ballot, District officials announced Friday.
S & P Global upgraded the district's rating to ‘AA+’ on existing general obligation bonds, while Moody’s Investors Service affirmed it highest rating -- ‘Aaa’ -- for the second year in a row.
The new ratings are expected to save taxpayers nearly $10 million over the life of the bonds by lowering borrowing costs, District officials said.
“We are so pleased to receive the strong ratings from both Moody’s and S & P,” School Board President Dr. Richard Tahvildaran-Jesswein said in a statement Friday. “S & P highlighted the district’s good management practices, and they were impressed with our long-term financial planning.
"It’s great to hear from the credit agencies that we are doing a good job.”
The S & P rating also reflects a growing taxbase composed of wealthy residents who live and work in one of the region's main economic centers.
The rating agency also cited a "substantial, diverse array of supplemental revenue streams," a manageable pension debt and conservative management.
The updated ratings come as the District last week successfully issued a $120 million Measure ES general obligation bond that will fund planned modernization projects in Santa Monica and Malibu schools.
“We are very pleased with the investor response to the SMMUSD sale,”
John R. Baracy, the District’s senior managing banker at Raymond James, said the District "was able to see almost a 10 basis point reduction in interest rates from the pre-pricing discussion to the final sale.”
The credit agencies' new ratings comes less than one month after the School Board placed a $485 million bond for Santa Monica and $195 million for Malibu to build and improve school facilities in both cities ("Santa Monica-Malibu School Board Votes to Place Record Bonds on the Ballot," June 30, 2018).
The move came after the board created School Facility Improvement Districts (SFIDs) for each City in anticipation of Malibu's possible split.
The funds raised by the bond measures would be dedicated to schools within each respective community, District officials said.
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