Moody’s Investor’s Service (Moody’s) once again assigned a Aaa Credit Rating to the Cobb County School District (CCSD). This rating is the highest credit rating available for a government entity. The district first secured the Aaa credit rating in 2015.
The Aaa credit rating reflects the district’s sizable and diverse tax base in suburban Atlanta and a stable financial position, bolstered by formal operating and financial policies, conservative budgeting, proactive management, and an above average pension burden, mitigated by the absence of any long-term debt.
Moody’s also reviewed the district’s business fundamentals and financial condition and assigned a Municipal Investment Grade (MIG1) Short Term Credit Rating to Cobb Schools. This designation is the highest short term credit rating in the financial industry and denotes superior credit quality. The MIG1 standard reflects the district’s excellent credit protection afforded by established cash flows and highly reliable liquidity support.
Credit ratings represent the credit worthiness of corporations and government entities. The credit ratings are published by credit rating agencies and used by investment professionals to assess the likelihood a debt can be repaid. Ratings play a critical role in determining how much companies and government entities, which issue debt, have to pay to access credit markets. Ratings determine borrowing costs and the amount of interest school districts pay on issued debt. A credit rating is also an indicator of an organization’s skill and experience with regard to financial operations including budgeting and forecasting, cash management, financial reporting, accounting, and financial management.
It is extraordinarily difficult to achieve and maintain a Aaa credit rating, according to Brad Johnson, CCSD Chief Financial Officer. Only 14 states currently hold a Aaa credit rating.
“The district’s entire financial team continues to demonstrate technical excellence, dedication and hard work in order to account for taxpayer funds,” Johnson said.
It is even more difficult for public school districts to achieve a Aaa credit rating because of limited diversity in general fund revenue streams and limited flexibility to cut educational services. By contrast, cities and counties have a wider range of revenue options and have more flexibility in their expenditure budgets.
“We have two of the highest credit ratings that can be obtained. Not many organizations, let alone school districts, are able to brag about both the Aaa Long Term Credit Rating and a MIG1 Short Term Credit Rating,” said Cobb Schools Superintendent Chris Ragsdale. “I appreciate Brad’s leadership in our financial services division, and I know he will be the first one to say it is a team effort.”