KBRA Assigns K1+ Rating to Cobb County School District, GA's Short-Term Construction Notes, Series 2025; Affirms K1+ Rating for Series 2024 Construction Notes and AAA Rating for Implied G.O. Credit
4 Dec 2024 | New York
KBRA assigns a short-term rating of K1+ to Cobb County School District, Georgia's Short-Term Construction Notes, Series 2025, due December 15, 2025. Proceeds will be applied toward the current expenses of acquiring, constructing, equipping and upgrading various school facilities and improvements approved by voters at referendum, and to pay expenses related thereto until the collection of a 1% sales and use tax for educational purposes (the "Sales Tax", or "Ed-SPLOST").
Additionally, KBRA affirms the short-term rating of K1+ on the District's Short-Term Construction Notes, Series 2024 due December 15, 2024, and the long-term rating of AAA with a Stable Outlook for the District's Implied General Obligation Credit.
Key Credit Considerations
The rating was assigned because of the following key credit considerations:
Credit Positives
- Consistently sound historic coverage of note debt service reflects a conservative approach to budgeting and cash flow management.
- Strong financial flexibility stems from ample General Fund reserves and the District’s ability to increase the General Fund millage rate, if necessary, to support operations and Note debt service.
- The moderate fixed cost burden reflects the District’s historical trend of full pension ADC funding and its large annual OPEB pay-go contribution, somewhat offset by the absence of long-term general obligation debt.
- The broad and rapidly growing resource base demonstrates very favorable trends in assessed valuation, per capita income and employment.
Credit Challenges
- Ed-SPLOST (Sales Tax) revenues are economically sensitive and subject to volatility.
- Salaries and fringe benefits consume a high 94% of the District’s budget.
Rating Sensitivities
For Upgrade
- Not Applicable
For Downgrade
- Unanticipated declines in Ed-SPLOST revenues or increases in Ed-SPLOST capital outlays during calendar year 2025, resulting in materially diminished anticipated cash flow coverage that necessitates use of ad valorem revenues to pay principal and interest on the Notes when due.
To access ratings and relevant documents, click here.