Moody's Upgrades School District’s Rating to Baa2

Moody's Upgrades School District’s Rating to Baa2
Posted on 05/01/2019
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In April, Moody's Investors Service upgraded to Baa2 from Baa3 the general obligation unlimited tax (GOULT) rating of West Allis-West Milwaukee School District. Concurrently, revising the outlook from stable to positive.

According to Moody’s: The upgrade to Baa2 reflects the district's improving financial profile with liquidity growing to satisfactory levels and elimination of a deficit financial position resulting from the implementation of considerable expenditure reductions and receipt of a large lawsuit settlement. The rating also considers some lingering uncertainty given the district's history of negative variances, weak voter support for operating levies, and management turnover coupled with rollover risk related to a large bullet maturity due on GO debt in 2020. Also factored is the district's large, suburban city of Milwaukee (A1 stable) tax base, as well as its moderate long-term debt and pension burdens. The positive outlook reflects the expectation of continued operating surpluses that will continue to grow reserves and reduce liquidity risks given recent operating adjustments.

“The positive outlook reflects the expected further strengthening of the District's credit profile over the near term, specifically the projected ability to continue to grow reserves and the implementation of tighter spending controls,” said Director of Finance and Operations, Caitlin Windler.

In 2015, an in-depth review of budgets and revenues compared to expenditures revealed that in 2013-2014 the General Fund balance was reduced by $5,265,391.08 and was further depleted by $8,780,048.33 in 2014-2015. The result was a deficit that depleted the fund reserves needed to operate and pay bills on a daily basis. In order to pay salaries, benefits, and invoices in a timely manner, borrowing for short-term cash flow was needed. This borrowing resulted in an interest payment of nearly $1,000,000 for four years beginning in 2016-2017. This debt will be paid off in 2019-2020 at which time the District will no longer realize such significant interest payments.

Since then, Superintendent Dr. Marty Lexmond and his team have worked hard to reduce operating costs, improve fiscal management, and increase school performance as measured on the State Report Card. “We have excellent teachers and administrators in our schools. During tough times, our District moved from having three failing schools and only one high performing school to a District with no failing schools and five schools that exceed expectations,” explains Lexmond.

“The District has worked diligently to resolve the financial challenges of the past and we will always be vigilant when it comes to our resources. The Moody’s rating is significant because it is another step forward. Our job is to ensure that all students are college and career ready when they graduate. That’s the work we’re excited to focus on now.”