Rock Island Today

A Rock Island County school district is enjoying some high bond ratings, following an evaluation action taken by Moody's Investors Service earlier this month.

Moody's assigned East Moline School District 37 an initial A1 issuer-rating and A1 GO ratings for the district's $6.8 million Taxable General Obligation School Bonds, Series 2021A and $11.4 million General Obligation School Bonds Series 2021B.

"Following the upcoming sale, the district will have $18.2 million in Moody's rated debt," Moody's said on Feb. 11.

Moody's initial A1 issuer and Go ratings indicate that the bond credit rating organization finds the school district's bonds high-quality but carries a marginally high long-term investment risk.

"The A1 issuer rating reflects the district's general credit quality and ability to repay debt and debt-like obligations," Moody's said in its rating action. "The district's cash will remain strong over the next several years because of a cash infusion in fiscal 2021 from working cash bonds with slight reserve declines projected thereafter. Enrollment is stable."

The school district enjoys "moderate resident incomes while per capita property wealth is weak," the announcement said, adding that the school district has a low long-term liabilities ratio, "although it is exposed to contingent risk from the State of Illinois' support of the underfunded teacher pension system."

Moody's also cited the school district's pledge of its legally available funds and its authority to raise ad-valorem property taxes.

Moody's also pointed out that it usually doesn't "assign outlooks to local governments with this amount of debt" and provided a list of ways the school district could receive an upgrade in its ratings. Those include an increase in residential incomes and wealth with sustained enrollment growth, improved financial reporting that does not uncover additional credit weaknesses and a reduction in contingent risk from the state's pension support."

Moody's also cautioned that things could happen that would lead to a downgrade of the school district's rating. Those include significant liquidity and reserve declines, deterioration of resident incomes or wealth with large enrollment losses and sizeable increases in debt or pension burdens.