S&P Affirms Hinsdale District 86 'AAA' Long-Term Bond Rating

Submitted by Hinsdale Township High School District 86

Hinsdale Township High School District 86 reported that Standard & Poor’s (S&P) Ratings Services has affirmed its “AAA” long-term rating on the District’s general obligation bonds. In the rationale summary S&P also stated that the District’s financial management practices received a rating of “good,” and that the financial outlook is stable going forward.

According to the report, the rating reflects S&P’s assessment of the following credit factors for the District:

• Participation in the Chicago metropolitan area’s broad and diverse economy
• Very strong income level and extremely strong market value per capita indicators
• Very strong operating reserves, supported by good financial management practices
• Low overall net debt burden as a percentage of market value

“I am pleased that S&P has affirmed our AAA long-term bond rating,” said District 86 Chief Financial Officer Bill Eagan. “Across the District we have worked very hard to control expenditures while upholding our high educational standards and tradition of excellence for our students. Our collective effort to maintain fiscal prudence is reflected in this rating and it keeps us on solid footing for the future. And while we are proud of receiving a ‘good’ rating for our financial management practices, we will immediately begin working on achieving the best possible rating of ‘strong’ for the next review.”

As noted in the summary, District 86 reported a $1.3 million surplus for fiscal 2013 and a $1.6 million surplus for fiscal 2014 for the combined educational and operations and maintenance (O&M) funds. As result, the combined fund balance for the two funds grew to $46.65 million, which according to S&P, is a very strong 50 percent of expenditures. The District holds additional reserves in the working cash fund, which reported an unassigned fund balance of $7.43 million at the end of fiscal 2014. For fiscal 2015, District Administration projects that it will break even in operations for the educational fund, run an O&M surplus of about $1.3 million and issue a working cash fund transfer of $500,000 to a pension fund.

S&P referenced the $1.2 million in District assets frozen as part of the Illinois Metropolitan Investment Fund (IMET) fraud investigation in its summary, noting that it did not affect the rating.

S&P issues ratings based on the most current material financial information as reported by the entities it evaluates. Ratings are subject to change. Although it noted that it considers the situation unlikely, S&P could lower the rating if District falls into a multiyear fiscal imbalance that results in a substantial drop in reserves.

Click here to view the full report.

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