$17.5 Million in La Mesa-Spring Valley School Bonds Get A1 Rating

A prominent Wall Street ratings agency has placed an A1 rating on $17.5 million in bonds the La Mesa-Spring Valley School District plans to issue next month, but set the overall outlook for the agency at negative.

That makes the debt worthy of investment, according to Moody's Investors Service, in an opinion released Wednesday, but falls short of the top-tier ranking.

The district, which has 17 elementary schools and four middle schools, is placing the general obligation refunding bonds in part to raise funds to pay off a portion of debt issued eight years ago. 

Moody's expressed concern regarding La Mesa-Spring Valley's limited flexibility in general fund spending, falling enrollment and an expected drop in reserves, but praised the district for its overall low debt levels.

The ratings agency noted that the district is not expected to balance its budget until 2015, and said the negative outlook is tied to the projection.

Any growth in assessed valuation – the district's revenues are tied to property taxes – also will help, the agency said.

“The removal of the negative outlook will depend on the actual results of the next few fiscal years,” the statement said.

The bonds are expected to go to market July 8.

A year ago, Moody's dropped the rating on La Mesa-Spring Valley's debt one slot, to A1.

In doing so, analysts said the change reflected “the uncertain ability and willingness of the district to enact solutions sufficient to achieve fiscal balance ... in order to reduce reliance on external sources for liquidity and avoid further operating draws on reserves.”