2009-12-04 20:54:46 -

As part of its ongoing surveillance effort, Fitch Ratings has affirmed its 'A-' rating on Firebaugh-Las Deltas Unified School District, CA's (the district) general obligation bonds. The Rating Outlook remains Stable.

The 'A-' rating reflects the district's continued sound financial operations, moderate debt levels, and significant cash reserve levels both within and outside the general fund. The rating further reflects the district's very limited local economy, its heavy dependence on falling state revenues to fund operations, and declining enrollment levels, which continue to reduce the district share of state funds calculated on a per pupil basis. The Stable Outlook reflects Fitch's confidence in the district's very strong cash position, even though this is budgeted to decline somewhat in the next year.

Financial

operations are sound, marked by stable general fund balance levels since Fitch's last review in 2006. The unaudited year-end total fund balance for FY09 is projected by the district at a $2.8 million, equal to a strong 14.8% of total FY09 general fund spending and transfers out. This compares with reserves of 12.9% at fiscal year end 2006. The district has budgeted for a large draw on general fund reserves in fiscal 2010, due largely to cuts in state revenue limit funding and to upcoming deadlines for disbursing accumulated federal stimulus dollars. A strong credit positive for the district is the special reserves it has accumulated outside the general fund, including $2.3 million in cash and $600,000 in investments. These are not factored into the reserve ratios stated above, and management states they are set aside for economic uncertainty and no other purpose.

Located across 98 square miles of California's San Joaquin Valley, the district is largely situated within Fresno County, with approximately one-quarter of its total valuation based in neighboring Madera County.
The limited local economy is heavily reliant on agricultural production, and is characterized by above average levels of unemployment and low wealth levels. Unemployment in Fresno County is above the state average, rising to a high 14.1% in September 2009 versus the state's average of 12%. Per capita income is well below average for the state and nation, remaining under $21,000 per year in both Fresno and Madera counties, versus the state median of $29,405 and the national median of $27,466.

The Fresno county portion of the district's total assessed valuation has so far declined very modestly amid the current housing turmoil, contracting by just 1.9% at the most recent assessment. This is the first year in which the Fresno county portion of the district's valuation has declined.

Overall net debt levels are moderately low at $837 per capita. No new issuance is expected due to the district's limited capital needs.

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

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS : .

IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON 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 RatingsvTom Cowell, +1-212-908-9130Barbara Rosenberg,
+1-212-908-0731Media RelationsCindy Stoller, +1-212-908-0526 cindy.stoller@fitchratings.com : mailto:cindy.stoller@fitchratings.com