The Lafayette Parish School System has maintained its Aa1 issuer rating following a recent review by Moody’s Investors Service. The district’s general obligation limited tax (GOLT) was also rated Aa1 by Moody’s.
The Aa1 issuer rating is a strong endorsement of the district’s ability to repay debt and debt-like obligations without consideration of any pledge, security or structural features. This determination was made as part of are view initiated January 26, 2021 in conjunction with the release of Moody’s new US K-12 Public School Districts Methodology.
At this time, the district has $2.1 millionin outstanding GOLT debt rated by Moody’s, with $13.9million legally defeased. Despite the effects of the ongoing pandemic, LPSS has maintained its Aa1 issuer rating for several reasons. First,the area’s expected economic growth over the near term is strong, and is further supported by the institutional presence of the University of Louisiana-Lafayette. Second, the district has “consistently maintained a healthy financial position, bolstered by liquidity inside and outside of operating funds” according to Moody’s.
And third, despite the district's elevated leverage position driven by long-term liabilities associated with retirees,its“prudent financial management practices” have offset future growth of unfunded liabilities. Assistant Superintendent of Business Services Billy Guidry is proud that LPSS has retained its premier creditrating in spite of the economic challenges of the pandemic and the downturn in the local oil and gas activity.“The Board, Superintendent, and staff have all worked towards establishing adequate fund reserves to ensureour ability to weather downturns in the economy.
In addition, reserves for critical capital needs such as roofing, HVAC and intercom/fire alarm system replacements also contributed to this strong rating. Moody’s acknowledged that these reserves and the reserve that has been established for the funding of post-retirement health benefits were major contributors to the retention of our rating.”The new Moody’s methodology for rating public school districts is designed to better assess the credit risk of K-12 issuers, which are distinguished from other governmental entities due to their unique credit drivers. It is a revised approach to rating a variety of debt instrumentsfor K-12 issuers in a single methodology anchored around a district’s issuer rating, which is primarilydriven by enrollment and fixed costs. More informationcanbe found at moodys.com.