REGION 16 — Region 16 earned a AA- rating from Standard and Poor’s financial ratings agency in its December assessment.
S&P Global Ratings placed the district on CreditWatch Sept. 28 due to uncertainty about its ability to manage potential cuts to state aid. It has now removed that CreditWatch.
Under the state budget, Prospect is expecting $721,000 worth of cuts in fiscal year 2018, but is expecting a surplus of $500,000 in fiscal year 2017, which will help it manage the state cuts, according to the report.
Meanwhile, Beacon Falls plans to budget conservatively to manage state aid reductions, the report states.
The stable rating of AA- reflects the district’s diverse property tax base, strong local economy with strong wealth and income, stable finances and moderate-to-low overall debt.
According to the report, the district’s 2016 surplus of $1.37 million is an adequate 3.2 percent of expenditures. Any surplus funds are typically returned to the towns in the form of credits on their education payments, but in the past voters have approved transferring some funds to a non-recurring capital account.
The report characterizes the district’s financial management practices as standard, indicating the finance department maintains adequate policies in some, but not all, key areas.
The district uses five-year historical-trend analysis when developing the budget, provides the Board of Education with monthly budget and investment-holdings reports, and has a five-year capital improvement plan it updates annually at budget time, the report states.
However, the report states, there are no formal debt-management plans. In addition, the district does not perform any formal long-term financial planning.
Director of Finance and Business Operations Pamela Mangini said removing the district from CreditWatch won’t impact the district’s existing debt but will have a positive impact on any future bonds the district might take on.
S&P said it would raise its rating if Prospect and Beacon Falls improve budgetary performance, strengthen reserves and maintain a manageable debt profile.