While grades measure student performance in the classroom, a school’s bond rating reflects how well the district is doing financially.
And Cleveland School is earning good marks. Moody’s Investors Service has upgraded the district’s issuer and general obligation unlimited tax (GOULT) bond ratings from A2 to A1.
“It’s great news,” said superintendent Brian Phillips. “Bond ratings are a good indicator of a quality school.”
A bond rating provides information to investors about the quality and stability of the bond. The rating greatly influences bond interest rates, investor desire to purchase a bond and bond pricing. A higher rating is a positive indicator of the district’s financial condition and management.
Cleveland’s improved rating comes from a positive enrollment, solid financial reserves and above average liquidity, Moody’s said in its investment report. A higher-than-normal income earned by the district’s residents is also a factor.
“The outside rating agency review and upgrade of our district is a direct reflection on the amazing staff we have working at Cleveland Public School,” Phillips said. “It all starts with having dedicated individuals who create great learning environments for all our students.”
The superintendent said school building improvements have also led to a better learning environment.
“Our new building addition—thanks to our taxpayers—has been an amazing thing for our district, and we are grateful. The upgraded facilities have raised our enrollment and allowed us to provide a number of new programs and activities."
But at the end of the day, parents choose which school their kids will attend, so Phillips is grateful to all who picked Cleveland.
“We thank all of our parents who send their children to our school and trust us to take good care of them.”
The better bond rating also reflects the school’s financial stability, Phillips said. Financial stability, in turn, depends upon a healthy fund balance.
“The fund balance is established and supported by our taxpayers when they approve our tax levies like our operating referendums. Having a healthy fund balance allows us to maintain and add new programs that serve the needs of our students and allows us to ride out the bad economic years without having to cut programs or reduce needed staff. Sometimes it is a guessing game with our state funding, and schools are always having to make tough decisions due to an unstable revenue source.”
While the increased rating means a better interest rate on new bonds, it doesn’t impact the interest rates the district is currently paying on outstanding bonds, Phillips said, but the better rating does help in refinancing or getting a better rate on additional bonds.
“At some point in the future, when the district refunds those bonds or issues additional bonds for capital improvements, the higher rating will result in greater savings and lower financing costs to the taxpayers.”
Founded in 1908 and headquartered in New York City, Moody's Investors Service provides investors with credit ratings, risk analysis and research for stocks, bonds and government entities. Moody's assigns ratings based on assessed risk and the borrower's ability to make interest payments, and its ratings are closely watched by many investors.