Moody’s assigns Aa2 to Waukee Community School District, IA’s GO bonds

Moody’s Investors Service has assigned a Aa2 rating to Waukee Community School District, IA’s $84.3 million General Obligation School Bonds, Series 2020B. We also affirmed the Aa2 rating on the district’s outstanding general obligation unlimited tax debt. Following the sale, the district will have $263.5 million in rated general obligation debt.

RATINGS RATIONALE
The Aa2 rating reflects a large, fast growing, and affluent tax base in the rapidly growing Des Moines (City of), IA (Aa2 stable) metro area, healthy yet below rated peers’ financial reserves and an elevated debt burden due to continued capital investment driven by strong enrollment growth. We do not expect the coronavirus to have a material impact on the district’s rating, primarily because of its revenue composition. The largest sources of revenue are property taxes (44% of operating revenue) and state aid (44%), which will remain stable for the current fiscal year. The situation surrounding the coronavirus is rapidly evolving and the longer term impact will depend on both the severity and duration of the crisis. If our view of the credit quality of the district changes, we will update our rating and/or outlook at that time.

RATING OUTLOOK
Outlooks are usually not assigned to local governments with this amount of debt.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
– Material growth in the district’s operating reserves
– Significant reduction in the debt burden

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
– Contraction of the district’s tax base or weakening of resident incomes
– Narrowing of the district’s operating reserves
– Growth in the debt burden