Moody’s Upgrades Credit Rating for the School District of Philadelphia For the First Time Since 2010
PHILADELPHIA — The School District of Philadelphia received more positive news this time from Moody’s Investor Services. Today Moody’s upgraded for the first time since 2010 the School District’s Bond rating, increasing the rating to Ba2 from the current Ba3. Moody’s cited “structural balance and operating surpluses” along with strong management control of finances.
The upgrade in the district’s credit rating was also coupled with Moody’s revising their long-term credit outlook for the District from “stable” to “positive.” This improvement is the second long-term credit outlook improvement in under one year for the School District.
“We are making progress in schools and classrooms across the city and we continue to make progress to ensure the strongest financial footing for the School District of Philadelphia,” said Dr. William R. Hite, Superintendent. “This upgrade continues our momentum as a district and ends the first week of school on a tremendous high note.”
In its report, Moody’s analysts stated, “The upgrade of the underlying rating to Ba2 speaks to considerable improvement in the district’s still strained financial position. Management is experienced, and though some are new to the district, the team has developed a detailed understanding not only of the district’s finances but also of charter pressures and the complexities of managing a highly dynamic, large, urban school district.”
“This fiscal stability, for which we have fought hard to obtain, is paying off. It allows us to continue making the necessary and sustainable investments in our schools, staff and buildings that are critical to improving educational outcomes for our students,” added Hite.
Additional reasons Moody’s cited for their decision to upgrade the District’s rating include:
-Structural balance and operating surpluses for last three years show a significant improvement over years of deficits;
-While the district is distressed, the city is not allowed to lower the rate or amount of the tax as stipulated by the Maintenance of Effort provision in Section 696 of the Pennsylvania School Code;
-Experienced management brings strong control of finances and detailed management of daily school operations;
-Reinvestment in its classrooms including implementing a 5-year, $440 million program that includes goals for literacy, college and career readiness; and
-Talent/workforce investment and capital improvements.
“We view this type of district spending as a strong credit positive – improvement in district classrooms should enable schools to be more competitive with charters. This type of investment, along with the negotiation of a long-awaited teachers’ contract, also improves the overall perception of the district as a viable provider of education services to city residents and tax-payers.”
The full copy of the report can be viewed here: https://www.philasd.org/wp-content/uploads/2017/09/MoodysReportPhlSchoolDistrict.pdf.