Moody's Upgrades Hatboro-Horsham School District to Aa1 Rating

HORSHAM---In news that will positively impact the bond borrowing rates for the construction of Hallowell Elementary School and result in a net overall interest cost savings of approximately $1.5 million, Hatboro-Horsham School District announced that its general obligation bond rating has been upgraded from Aa2 to Aa1 by Moody’s Investors Service. General obligation bonds are issued by school districts to fund large-scale projects.

Robert Reichert, District Director of Business Affairs, spearheaded the effort to advance the rating. In an onsite meeting at the district administrative offices, Moody’s evaluation team reviewed documentation that underscored Hatboro-Horsham’s strong financial position. Impressed with what they saw, the team awarded the bond rating upgrade on September 18.

According to Reichert, this rating upgrade would not have occurred without the School Board’s commitment to conservative budgeting practices, long-term financial planning, innovative cost reduction and revenue generating strategies, and a value oriented approach to decision making; and without the commitment of District staff who have continued to produce high quality results with a limit supply of resources.

Making the Case for Upgrading the Bond Rating

Since the inception of Act 1 almost 10 years ago, the district has operated within the tax increase index limits without seeking exceptions which has resulted in millage and budget increases which were second lowest in the county over that time period. Over that same period, the District has been able to improve its financial position in a very challenging economic environment and plan effectively for Pennsylvania State Employees’ Retirements System (PSERS) obligations, future debt service requirements, medical cost increases, and needed capital projects and annual operating expenses. Moody’s was impressed with the District’s long range financial planning strategies which included building financial reserves necessary to meet current and future expense obligations.

Moody’s also reviewed documentation of the District’s tax base which is expected to show modest growth. Of particular note was evidence of steady and continued increases in assessed values throughout the economic downturn. This data was supplemented with information about the area’s commercial businesses and business complexes, as well as the benefits that will likely be derived from the redevelopment of the former Willow Grove Joint Reserve Naval Air Station Base.

The District provided a strong case to show that although fiscally conservative, it did not sacrifice its high-quality educational programs. Rather, by employing creative cost reduction strategies that focused on sustainable, recurring cost saving measures, the District has successfully maintained its excellent reputation and its commitment to high-quality, value-based educational programming.

Reichert applauded School Board decisions that directly effected the District’s financial position. “Schools operate in a fiscal environment that is getting tighter and tighter. It is not common for a district to receive a bond upgrade in a challenging economic environment. The School Board played a vital role in advocating for measures that improved our financial position and financial security which resulted in the bond upgrade,” Reichert emphasized.