District attempts bond ratings jump

Alyssa Sykuta

This spring Columbia Public Schools will try to raise its bond rating to AAA status in hopes of saving several million dollars. Superintendent Chris Belcher said CPS decided to have a Moody’s bond rating agency representative travel to Columbia from New York City to perform a full financial assessment of the district and community.

“At the last conversation with Moody’s on the phone, they were so impressed that in such a hard financial time that we were managing to build balances and plan for a future of state reductions and funding,” Belcher said. “They said we may want to consider doing a full visit because [CPS is] doing some things exceptionally well.”
Bond ratings work similarly to  credit scores: the higher the bond rating, the more appealing the bond looks to customers and the more likely people are to get a return on their invested money.
In the Moody’s system, a national organization which assesses credit worthiness of corporations, the highest rating possible is AAA. For the past five years, the school district has sat at the next highest rating, AA, which is still a safe and reliable investment.
Linda Quinley, CPS Chief Financial Officer, said obtaining the higher bond rating would make bond buyers more competitive, leading to a lower interest rate for CPS. This could leave the district with a significant amount of money in interest savings as well as attesting to the firmness of the district’s financial standing, she said.
Quinley said four main factors will determine whether CPS will receive the AAA bond rating when a Moody’s representative conducts a full review this spring. The first component is the standing of the local economy, which Quinley said is “always a good solid piece because Columbia’s doing pretty well.” The next element is assessed valuation, the rate at which the values of housing and new development decreases.
The remaining two factors rest heavily on the district. The Moody’s representative will look at CPS’ budget, operating income expenses, whether they are working at expenses or defecits and current fiscal management.
Belcher feels confident the rating will be raised, and he hopes it takes place before April, in time for the next bond sale of $50 million.
“Columbia’s a really rare exception of being a vibrant community,” Belcher said. “I think we’re about as safe a bet as you can get on paying back that money.”
Although Belcher expects the bond rating to be raised, Quinley is still unsure of which way the rating will go.
Until the decision is made, she resolves to waiting anxiously and not anticipating the result.
“This is the toughest request [CPS has] made,” Quinley said. “This is the toughest test we’ve given ourselves. I will be pleasantly surprised if we do [receive the AAA rating]. It’s not impossible, but it is such a daunting task. They don’t just dole these things out; they’re hard to come by.”
By Alyssa Sykuta