|[August 06, 2014]
Fitch Affirms Missouri School District Direct Deposit Program at 'AA+'; Outlook Stable
NEW YORK --(Business Wire)--
Fitch Ratings has affirmed the 'AA+' rating on the state of Missouri's
School District Direct Deposit Program. The Rating Outlook is Stable.
Program bonds are enhanced by the state's obligation to directly deposit
state aid payments with the trustee.
KEY RATINGS DRIVERS
--STRONG PROGRAM MECHANICS: The structure of the program provides for
full and timely payment of debt service from state aid payments to
participating school districts through direct deposit of monthly state
aid payments to a trustee.
--SOLID REQUIRED COVERAGE BY STATE AID: Pursuant to program guidelines,
participating school districts are required to demonstrate 1.5x coverage
of maximum annual debt service (MADS) by state aid monies allocated to
debt service, both in the year of issuance and in the two prior fiscal
--MISSOURI'S STRONG CREDIT QUALITY: The program rating reflects the
state's overall credit quality, as reflected in its 'AAA' general
obligation (GO) bond rating, upon which this program rating is based.
STATE RATING: The rating on the credit enhancement program is directly
linked to the state's GO debt rating.
PROGRAM CHANGES: Change in the statutes, regulations, or administrative
procedures governing the direct deposit program that alter the current
mechanisms to ensure timely payment of debt service could trigger rating
The program rating is based on the ability of Missouri school districts
to apply for direct deposit of monthly state aid payments to a trustee
to pay debt service, the program's requirement for debt service coverage
of at least 1.5x MADS by current and past aid revenues, and the state's
general credit condition, expressed in its 'AAA' GO bond rating.
The structure and mechanics of Missouri's school district direct deposit
program provide for full and timely payment of debt service from state
aid payments. Program guidelines enable school districts to request that
the state send the first dollars of monthly state aid distributions to a
debt payment trustee in 10 approximately equal monthly installments. The
trustee transfers moneys to the district's paying agent no later than
one day prior tothe debt service payment date. The 10-month timeline
for fulfilling annual debt service needs provides a two-month cushion to
intercept additional available state aid moneys, if needed, for
bondholders' benefit. This structure allows for a rating one notch below
the state's GO bond rating.
Participating school districts must maintain debt service or capital
projects tax levies sufficient to retire the bonds and may finance
general operations with these funds through transfers structured to
coincide in amount and timing with state aid moneys captured by the
direct deposit mechanism for bondholders' benefit.
Upon request, Fitch will assign an 'AA+' rating to Missouri school
district GO bonds qualifying for participation in the Direct Deposit
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'U.S. State Government Tax-Supported Rating Criteria', dated Aug. 14,
--'Rating Guidelines for State Credit Enhancement Programs', Apr. 18,
Applicable Criteria and Related Research:
U.S. State Government Tax-Supported Rating Criteria
Rating Guidelines for State Credit Enhancement Programs
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE
RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR
RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY
CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
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