[January 23, 2015]

Fitch: Latest Accreditation Developments Positive for San Francisco Community College District

Two recent developments in a battle over accreditation are positive for San Francisco Community College District (the district), according to Fitch Ratings. On Jan. 14, the Western Association of Schools and Colleges' Accrediting Commission for Community and Junior Colleges (ACCJC) granted the district restoration status, which removes the near-term threat of accreditation loss and provides the district with two additional years to come into full compliance with accreditation standards.

In addition, on Jan. 16, a San Francisco judge tentatively ruled that several aspects of the 2013 decision to terminate the district's accreditation violated state unfair competition law, and that the ACCJC would need to allow the district to respond to its concerns before reaffirming or rescinding its 2013 decision.

If the district moves forward with restoration it will face a new review by the ACCJC in January 2017, at which point it would need to demonstrate its full compliance with accreditation standards or again face termination. The ACCJC could alternatively elect to rescind its 2013 termination of the district's accreditation following a final ruling in the San Francisco case, although such a decision appears unlikely based on the ACCJC's actions to date. In either scenario the near-term risks of accreditation loss are greatly reduced.

Fitch views these ecent developments as positive for the district, despite continuing uncertainty over how its accreditation challenges will play out. Fitch currently rates the district's general obligation bonds 'BBB+' with a Negative Outlook, and expects to review the impact of these and other developments within the next several months. Additional information is available in Fitch's March 24, 2014 press release, 'Fitch Affirms San Francisco Community College District's (CA (News - Alert)) GOs at 'BBB+'; Outlook Negative', available at www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

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