The international credit rating agency Moody's downgraded the from Aa3 to A1 in November. The downgrade came following the district’s request for Moody’s to review its credit as it prepared to refinance several bonds from 2003. Moody's released the news three weeks before the public overwhelmingly voted down a new
Despite the downgrade, district representatives say they remain confident in its financial stability and says the downgrade changes the district's borrowing interest rate by an increase of .1 percent.
Moody's press release on the downgrade, posted Nov. 23, said: "The downgrade is based on the continually deteriorating financial condition with no viable recovery plan as well as the additional challenges posed by the New York state tax cap."
Moody's reported that the district’s credit rating strength is it’s sizable tax base with above average wealth levels. The district’s challenges are establishing structural budgetary balance, declining tax valuations and the property tax cap, according to Moody's.
Moody's also noted that a significant increase in the debt burden could make the rating go down further. The district held the vote on the on Dec. 14, which the public o
Read Moody's full press release here.
The district released the following statement regarding the change in its rating:
The Hendrick Hudson School District was recently notified by Moodys, the international credit rating agency, that its credit rating was downgraded to A1 from Aa3. According to Moodys, “The A1 rating reflects the district's sizeable tax base with above average wealth levels, average debt burden and narrowing financial position.”
Despite the rating change, the Hendrick Hudson School District remains in the upper ranks of the Moody’s rating system. Earning a distinction of an “A” credit rating means obligations are considered “upper-medium grade and are subject to low credit risk.”
The credit rating change came as a result of a request by the district for a credit rating review as it prepared to refinance several bonds from 2003. The refinance resulted in a savings of $630,000 over the next ten years.
While the downgrade is a disappointment, it is unfortunately due in large part to forces outside the districts control including, the pending tax cap, and declining revenues due to a lackluster housing market. The district is also facing challenges other schools are having in terms of declining property values and significant reductions in state aid.
“While we were certainly disappointed with the change, it really didn’t come as a huge surprise. Moodys and the other credit agencies have been revaluating credit ratings for almost all credit bearing agencies. The change is more a reflection of what is taking place economically on a state and federal level than it is about our financial health,” said Rick McCormack, Public Relations Coordinator for the Hendrick Hudson School District.
“The same day Moodys notified us of the change, they notified one hundred+ other agencies of similar changes in their credit rating. More importantly though, the actual change will have little impact on our day-to-day operations and finances. In fact, our recent refinancing came in the wake of the change and it resulted in just a .1% increase in our borrowing rate.”
“We remain confident in the state of our financial health and our ability to meet our obligations,” concluded McCormack.
Editor's Note: The article has been adjusted to include more details on the downgrade, including statement's from Moody's press release. Also, Moody's downgraded the distrcit from Aa3 to A1 in November. The original article reversed the order of the ratings. We regret the error.