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Bond Accountability Commission 2 Recommendations Page 93

Potential Impacts from Credit Rating Changes

Rating agency actions are in a state of flux. Recent data relating to CMSD and its property tax base commonly are indicative of potentially adverse rating actions. On the other hand, due to market pressures from issuers and federal legislative proposals potentially affecting the rating agencies, Moody’s ( as well as Fitch) are “recalibrating” municipal securities ratings on “global” rating scales. Standard and Poor’s states that it has always rated municipal securities on a “global” scale, but has recently been upgrading a substantial number of municipal securities issues.

Potential Consequences of Rating Downgrades CMSD’s recent declines in assessed value and declines in property tax collection rates demonstrate a weakening property tax base. CMSD’s forecast of significant operational deficits demonstrates a worsening financial condition. Both of these factors are viewed negatively by the Standard & Poor’s and Moody’s. Fitch does not rate CMSD’s Bonds. CMSD’s 2002 and 2004 bond issuances were assigned credit ratings at 3 levels: (1) CMSD’s own credit, (2) credit enhancement by the Ohio Department of Education, and (3) credit enhancement from bond insurance.

BAC2 Recomendations Final 04062010  
BAC2 Recomendations Final 04062010