|[July 24, 2014]
Fitch Affirms South Carolina's School District Credit Enhancement Program at 'AA+'; Outlook Stable
NEW YORK --(Business Wire)--
Fitch Ratings has affirmed the outstanding 'AA+' rating on the South
Carolina School District Credit Enhancement Program. The Rating Outlook
School district general obligation (GO) bonds are enhanced by the
state's obligation to intercept school aid payments to make debt service
payments in a timely manner.
KEY RATING DRIVERS
ABILITY TO INTERCEPT STATE SCHOOL AID: The rating reflects the strong
structural, legal, and administrative protections of the program and,
ultimately, South Carolina's obligation to intercept school district aid
payments for payment of district enhanced GO bonds in a timely manner.
SOUND PROGRAM MECHANICS: Program mechanics provide for full and timely
payment of debt service from appropriated state aid.
STATE GENERAL FUND TRANSFERS PROVIDE ADDITIONAL SECURITY: Should a
delinquent school district have insufficient moneys available to
intercept for debt service, the state treasurer is required to transfer
sufficient moneys from the general fund of the state to make full and
timely payment of debt service limited only by the total available state
appropriation for education in that fiscal year.
STATE CREDIT QUALITY: The rating is sensitive to movements in the state
of South Carolina's 'AAA' GO bond rating to which it is linked.
Fitch will assign an 'AA+' rating with a Stable Outlook to South
Carolina school district GO bonds qualifying for participation in the
School District Credit Enhancement Program. The rating is based on
strong statutory provisions and program mechanics, as well as the
state's general credit condition expressed in its 'AAA' GO bond rating.
Procedures to ensure timely delivery of state moneys are strong and all
school districts are covered by the intercept when they issue GO bonds
according to state statute.
Prior to delivery of additional GO bonds, a school district must file
its debt service payment schedule with the office of the state
treasurer. Pursuant to state law, the county treasurer or any other
paying agent must notify the state treasurer if sufficient debt service
moneys have not been remitted by a school district at least 15 days
prior to the debt service payment date. Should the county treasurer
confirm that debt service moneys remain insufficient three days prior to
the bond payment date, the state treasurer is directed to advance state
general fund moneys to fulfill the school district's debt service
The program limits the amount that may be advanced on behalf of a school
district in any fical year to that year's statewide appropriation for
basic education under the Education Finance Act (EFA). This funding
ceiling is an absolute dollar limitation and is not reduced by the
regular disbursement of EFA moneys to school districts throughout the
fiscal year. Upon advancement of funds, the state treasurer will
withhold future state aid due the district sufficient to reimburse the
state's general fund the advanced amount plus interest. Additionally,
the county auditor is directed to adjust the district's future debt
service property tax rates, correcting the prior financial distress.
All school districts are covered by the intercept when they issue GO
bonds according to state statute. The enhanced rating can be applied if
there is 1.25x coverage of historical annual school aid to pro forma
maximum annual debt service, and debt service payment dates are set such
that available school aid is expected to be sufficient to meet debt
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria', Aug. 14, 2012
--'State Credit Enhancement Program Criteria', April 18, 2013
--'U.S. State Government Tax-Supported Rating Criteria', Aug. 14, 2012.
Applicable Criteria and Related Research:
Rating Guidelines for State Credit Enhancement Programs
U.S. State Government Tax-Supported Rating Criteria
Tax-Supported Rating Criteria
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE
RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR
RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY
CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
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