Centennial School District's Financial Health Strong, Moody's Says

WARMINSTER, PA —The Centennial School District is in a strong financial position, according to its bond rating from Moody's.

Centennial Schools Superintendent Dana Bedden said that Moody’s Investors Service assigned a Aa2 general obligation limited tax (GOLT) rating to the district’s Series A and B of 2024 General Obligation Bonds.

A school district's bond rating and an individual's credit score are similar in that both are assessments of financial reliability and trustworthiness.

"This rating is a testament to the district’s healthy financial position and prudent fiscal management," Bedden said.

Moody’s rating system, widely used by investors and financial institutions, provides an independent assessment of the creditworthiness of entities like public school districts. Ratings range from Aaa, which indicates the highest level of creditworthiness, down to C, which suggests a substantial risk of default.

The median rating for public K-12 school districts nationally and in Pennsylvania, is Aa3.

Bedden said the district's Aa2 rating is one notch above this median, highlighting the district’s robust financial health. A higher rating allows the school district to borrow money at lower interest rates, saving taxpayer money.

The Aa2 rating reflects the district’s strong financial metrics, including an available restricted and
unrestricted fund balance ratio equivalent to 18.7 percent of total revenue at the end of fiscal year 2023.

Moody’s indicated a fund balance below 15 percent could lead to a ratings downgrade. The district’s rating can change based on financial management, economic conditions, and changes in debt levels.

CSD’s ratio, which includes the General Fund balance and the Debt Service Fund but excludes the
capital fund, is a key indicator of the district’s financial stability.

The total 2023 fund balance of $26.2 million is composed of $13.5 million in the Debt Service Fund, $2.5 million in the Committed General Fund, and $10.2 million in the Unassigned Fund.

It is important to note that Centennial’s unassigned fund balance, which must remain below 8 percent of total revenue as per state regulations, is well-managed within these limits, Bedden said.

Proceeds from the sale of the bonds will be used to refund 2016 bonds at a reduced rate, saving the
District over $3 million and reducing the annual debt service expense, Bedden said.

Moody’s cited the district’s conservative budgeting and expense management practices, which have contributed to this strong financial position, and the district’s above-average household income levels, which are 122 percent of the national average.

The district’s leverage, or the amount of debt relative to revenue, is expected to remain moderate and manageable.

“This rating reflects our ongoing commitment to sound financial management and our ability to meet our financial obligations while continuing to save taxpayer dollars and invest in the success of our students,” Bedden said. “We are pleased that Moody’s has recognized our efforts and the financial strength of our district. I also want to thank our financial team for their continued hard work in this area.”