header image

[Sign Up Now] to Receive Our FREE Daily SCVTV-SCVNews Digest by E-Mail

Inside
Weather


 
Calendar
Today in
S.C.V. History
April 3
1917 - Castaic post office established inside Sam Parson's general store [story]
General Store


fitchratingsFitch Ratings has assigned an ‘AA’ rating to the following general obligation (GO) bonds to be issued by the Santa Clarita Community College District, California:

–$94 million 2016 GO refunding bonds.

The bonds are expected to price the week of May 30 via negotiated sale. Proceeds of the bonds will advance refund outstanding GO debt for interest savings.

In addition, Fitch has affirmed the following ratings:

–Issuer Default Rating (IDR) at ‘AA’;

–$214 million outstanding GO bonds at ‘AA’;

–$18 million outstanding certificates of participation (COPs) at ‘AA-‘.

The Rating Outlook is Stable.

 

SECURITY

The GO bonds are secured by unlimited ad valorem property taxes levied on all taxable property in the district. The district’s COPs are supported by a covenant to budget and appropriate lease rental payments for the use of certain essential assets.

 

KEY RATING DRIVERS

The ratings reflect the district’s strong operating performance, moderate liabilities, considerable expenditure flexibility, and history of revenue growth. While the district has no ability to independently raise revenues, the district has ample ability to offset declines in state funding by reducing the number and hours of classes commensurately, which it can do by immediately reducing the number of adjunct professors. As a result, Fitch expects operating performance to remain sound, with largely balanced financial operations and stable reserves.

 

Economic Resource Base

The district benefits from its access to and participation in the broad Los Angeles economy and is well positioned to capture ongoing regional growth. Local employment and housing markets have seen steady gains over the past several years and wealth and income levels for the district remain above average.

 

Revenue Framework: ‘aa’ factor assessment

District revenues have grown strongly over the past 15 years due to rising enrollment, and have also been bolstered more recently by state economic improvement; however, the district’s legal ability to raise revenues is constrained by Proposition 13, which requires voter approval for tax increases.

 

Expenditure Framework: ‘aa’ factor assessment

The district has ample ability to adjust spending to match revenues due to its control over part-time staffing levels which can fluctuate with demand or state funding of enrollment. On average, growth in spending is likely to be in line with revenue growth over time.

 

Long-Term Liability Burden: ‘aaa’ factor assessment

The district participates in a two adequately funded state-run pension plans and funds the bulk of its capital needs from voter-approved property tax levies, resulting in a long-term liability total that is a moderate burden on resources. A bond election scheduled for June would increase the district’s debt load materially if successful, but overall liabilities are anticipated to remain low.

 

Operating Performance: ‘aa’ factor assessment

The district’s solid expenditure cutting flexibility offsets its lack of independent revenue-raising ability and lower reserve levels relative to its historical revenue volatility. The district budgets conservatively and Fitch expects it to maintain an adequate financial cushion.

RATING SENSITIVITIES

IDR SENSITIVE TO FINANCIAL PERFORMANCE: The ‘AA’ IDR could face downward pressure if the district fails to maintain satisfactory financial flexibility, including reserves sufficient to withstand historical volatility.

CREDIT PROFILE

The district serves approximately 16,000 full-time equivalent students on two campuses in northern Los Angeles County.

 

Revenue Framework

State aid and local property taxes provide the majority of district revenues, which are ultimately determined by a formula based on enrollment and overall state revenues.

Historical revenue growth has exceeded inflation and U.S. economic performance due to long-term enrollment growth. Future revenue growth will be based on continued enrollment gains and state per-pupil funding levels. The latter may peak over the medium term following recent growth due to improvement in the state’s economy.

The district has no independent ability to raise revenues. California’s proposition 13 requires a vote of the people to raise taxes.

The district is dependent on the State of California for the vast majority of its revenues. The state constitution’s priority for education funding and its minimum funding levels based on the state’s own revenue performance provide a sound revenue framework despite the district having no independent ability to raise revenues.

 

Expenditure Framework

Personnel costs comprise the vast majority of district expenditures and are likely to be in line with-to-moderately above expected revenue growth based on the district’s current spending profile.

The district enjoys solid spending flexibility to manage the level of services provided because it is able to adjust enrollment and its teaching staff. A majority of the district’s teaching staff are adjunct professors, who while unionized do not share the tenure protections of regular faculty. Fixed costs for debt service and retiree benefits are moderate at 14% of fiscal 2015 primary government revenues. The teachers’ pension contribution rates are scheduled to rise but remain manageable.

 

Long-Term Liability Burden

Debt and pension liabilities are a moderate burden on the resource base at an estimated 9% of personal income. Amortization of existing direct debt is slow due to the district’s use of long-dated capital appreciation bonds, and appears likely to slow further if district voters approve a proposed new bond program that could double the district’s outstanding debt. Overall liabilities are expected to remain affordable even with the district’s potential new issuances over the next several years.

 

Operating Performance

Fitch expects the district to maintain relatively balanced operations over the long term and available fund balances near 10% of general fund spending. Recent budgets appear conservative. The district’s current reserve levels are consistent with a reserve safety margin at the ‘a’ level; however, the district maintained relatively stable fund balances through the recession due to the flexibility provided by its part-time teachers and ability to adjust services offered in terms of the number of classes.

Budgets continue be balanced during the economic recovery and reserve levels have held stable.

Additional information is available at ‘www.fitchratings.com‘.

In addition to the sources of information identified in the applicable criteria specified below, this action was informed by information from CreditScope and Lumesis.

Comment On This Story
COMMENT POLICY: We welcome comments from individuals and businesses. All comments are moderated. Comments are subject to rejection if they are vulgar, combative, or in poor taste.
REAL NAMES ONLY: All posters must use their real individual or business name. This applies equally to Twitter account holders who use a nickname.

0 Comments

You can be the first one to leave a comment.

Leave a Comment


Latest Additions to SCVNews.com
California State University, Northridge’s Department of Theatre will host Native Voices, the only professional theatre company in the United States devoted to bringing Indigenous playwrights, 7:30 p.m. Monday, April 7, to perform “To Indigeneity and Beyond!”
April 7: Native Voices to Perform at CSUN
The William S. Hart Union High School District has announced that Anthony Eslao, a senior at Golden Valley High School, has been awarded the distinguished California Scholarship Federation Seymour Award. Additionally, Matthew Thomas De Guzman, also from Golden Valley, has been recognized as a Seymour Award finalist.
Golden Valley Student Wins CSF Seymour Award
Assemblywoman Pilar Schiavo’s bill, D-Chatsworth, the Expediting State Housing Permits Act (AB 301) was passed as part of a major package of housing legislation aimed at tackling the state’s housing crisis.
Schiavo Joins Forces with Rivas to Expedite Housing Development
The Department of Water Resources conducted the all-important April snow survey on Wednesday, April 2, the fourth measurement of the season at Phillips Station.
DWR April Snow Survey Shows California at 110% of Average
The Santa Clarita Master Chorale invites you to an elegant evening of wine, dinner and song atthe annual Cabaret & Cabernet benefit “The Beat Goes On,” on Saturday, April 26, 5 p.m. at the Hyatt Regency Valencia.
April  26: ‘The Beat Goes On’ Master Chorale Cabaret & Cabernet Benefit
Visit the Santa Clarita Public Library Valencia branch, 5:30-6:30 p.m. Tuesday, April 8 for a "Alice's Looking Glass" crafting session.
April 8: ‘Alice’s Looking Glass’ Craft Session at Valencia Library
Join the Santa Clarita Valley Chamber of Commerce for a Grand Opening Ribbon Cutting at Monarch Beauty Academy, Thursday, April 24 at 4 p.m.
April 24: Monarch Beauty Academy Grand Opening Ribbon Cutting
For the third year in a row, The Master's University's basketball player Kaleb Lowery has been named an NAIA All-American, this time on the First Team.
Lowery Named First Team All-American
Lief Labs, a premier formulation and product development innovator and manufacturer of dietary supplements, has announced the launch of its 2025 Brand Boost Guide which offers tips, guidance and resources to support dietary supplement brands in identifying potential sales growth and risk management strategies.
Lief Labs Launches 2025 Brand Boost Guide
The Master's University men's volleyball team completed the sweep of its old rival with a 25-11, 25-21, 25-19 controlling of the Arizona Christian Firestorm Saturday afternoon, March 29 in Glendale, Arizona.
Mustangs Complete Sweep on Arizona Trip
Arbor Day is more than just a celebration, it’s a commitment to our future. Every year, communities across the world come together to plant trees, promote environmental stewardship and enhance the landscapes that make our cities and towns more beautiful and livable.
Jason Gibbs | Celebrate Arbor Day in Santa Clarita
April 30 will be the final day for submitting comments regarding the updating of Los Angeles County Floodplain Management.
April 30: Deadline for Comments on Floodplain Management
Among several important issues presented at its Tuesday, April 8 regular board meeting, the Los Angeles County Board of Supervisors will hear recommendations on establishing a unified permitting authority for the Altadena One-Stop Recovery Permitting Center relating to properties impacted by the Eaton Fire.
April 8: Supes to Consider Altadena One-Stop Recovery Permitting Center
1917 - Castaic post office established inside Sam Parson's general store [story]
General Store
April is National Distracted Driving Awareness Month, a nationwide initiative that highlights the dangers of distracted driving and promotes safer driving habits.
April 7-14: CHP MEP for National Distracted Driving Awareness Month
One of the things that makes the city of Santa Clarita such a great place to live, work and play, is the wide range of amenities we offer our community.
Ken Striplin | A Library Without Walls for a City Without Limits
Los Angeles Health Services has released its 2024 Annual Report, showcasing a year of exemplary achievements in patient care, innovation, and community health.
County Health Services Releases 2024 Annual Report
The ability to put nutritious food on the table is one of the most important and pressing matters that low-income families face daily. 
CSUN Family Kitchen Project Gives Food Coupons to Families During Summer
American Sports Entertainment Company and the LA Kings, collectively referred to as JV Ice at The Cube, are seeking proposals to license restaurant and bar space at The Cube – Ice and Entertainment Center, powered by FivePoint Valencia.
The Cube Ice, Entertainment Center Seeks Restaurant Partner
The College of the Canyons Foundation will host its third annual 3-on-3 Basketball Tournament from 9 a.m. to noon on Sunday, April 27, in the college’s West P.E. (WPEK) gymnasium, located on the Valencia campus.
April 27: COC Foundation to Host Third Annual 3-on-3 Basketball Tournament
The LA County Arts Internship Program will invest over $1.6 million to fund 228 university and community college internships, providing students with paid on-the-job experience in the arts and creative sector at over 170 nonprofit organizations starting this summer. Applications for interested students are open now.
Nation’s Largest Paid Summer Arts Intership Program for County College Students
SCV Water received three prestigious awards from the California Association of Public Information Officials at an awards luncheon on Wednesday, April 2, 2025.
SCV Water Wins Three Awards For Communications Initiatives in 2024
When Abraham Martinez-Peña enrolled at California State University, Northridge as a film major, he knew the path he set out for himself — to be a professional comedy writer for film and television — would not be an easy one. Hollywood’s hiring reputation was more “who you know,” than “what you can do.”
CSUN Alum Develops Mentorship Program for Aspiring Comedy Writers
After a nine-month process pursuant to requirements set forth in California’s Proposition 218, the SCV Water Board of Directors concluded its rate study and voted to implement proposed rate changes following a public hearing on Tuesday, April 1, 2025.
SCV Water Board of Directors Approves Rate Changes
SCVNews.com