District's top bond ratings to save taxpayers $150M
September 3, 2019 |
Two of the nation’s benchmark bond-rating services have again assigned the San Diego Community College District their highest rating possible, which is expected to save taxpayers as much as $150 million when the district refinances its bonds this fall through a process called re-funding.
S&P Global assigned a rating of AAA to SDCCD’s bonds; Moody’s Investors Service assigned an Aaa rating. Both agencies lauded the SDCCD’s financial management practices, stable reserves and low debt burden, in addition to the strength of the regional economy. Both judged the SDCCD’s financial outlook as “stable.”
“Receiving top bond ratings from S&P and Moody’s is a strong endorsement of the district’s sound business practices,” said SDCCD Chancellor Constance M. Carroll. “More important, however, is the fact that these ratings will translate into real savings for local taxpayers over the life of the bonds.”
Ratings measure the credit worthiness of corporate or government institutions. The latest ratings not only will allow the SDCCD to re-fund up to $728 million in bonds at a lower interest rate, they will enable the district to eliminate 70 percent of its capital appreciation bonds. Capital appreciation bonds allow school and college districts to borrow money for construction projects and pay it back with compounded interest decades later. While the SDCCD did not issue many capital appreciation bonds, eliminating 70 percent of those previously issued significantly contributed to the taxpayers’ savings projected for the refunding.
The upgraded bond ratings come on the heels of the SDCCD earning a perfect score from the San Diego Taxpayers’ Education Foundation’s 2019 School Bond Transparency in San Diego County Summary Report, meeting 25 out of 25 categories looking at the availability and accessibility of public information on bond programs. This was the third time in the past four years the SDCCD earned a perfect score.
“The reaffirmation of SDCCD’s triple A ratings with S&P and Moody’s reflects both agencies view of the district’s outstanding leadership and management in maintaining strong budgetary and financial flexibility in the short-term while continuing to address long-term liabilities and cash reserves,” said Bonnie Ann Dowd, SDCCD Executive Vice Chancellor, Business and Technology Services.
The $1.555 billion Propositions S and N construction bond program has allowed the SDCCD to transform San Diego City, Mesa, and Miramar colleges, and San Diego Continuing Education’s seven campuses. Proposition S authorized the sale of $685 million in bonds and was approved by voters in 2002. Proposition N authorized the sale of $870 million in bonds and was approved by voters in 2006.