2008-06-17 23:45:29 -

- Fitch Ratings assigns an 'AA+' rating to Carmel Unified School District (USD), California's $10.8 million election of 2005, series 2008 general obligation bonds (GOs) and affirms the district's approximately $28.9 million in outstanding GO debt at 'AA+'. The new bonds will sell by negotiation the week of June 23, 2008. The Rating Outlook is Stable.

The 'AA+' rating reflects the district's affluent tax base, continued positive financial operations with high reserve levels, the potential effects of a regional housing downturn on future revenues, and minimal debt burden. The rating also considers the district's moderate taxpayer concentration in the leisure and hospitality sector and relatively slow debt amortization. Because the district receives more revenue from its wealthy local property

tax base than the state's minimum per-pupil funding basis would otherwise guarantee, Carmel USD is largely insulated from state funding fluctuations.

The district covers a 600-square mile area on the central coast of Monterey County. It serves a population of approximately 30,000 residents in Carmel-by-the-Sea and unincorporated territory including portions of Pebble Beach, Carmel Valley and Big Sur. The district benefits from its desirable location, solid economy, and wealthy tax base. Additionally, the district is home to several world-renowned golf and recreational areas. The district's population has employment opportunities throughout the Monterey peninsula and Silicon Valley to the north. Assessed valuations have grown briskly since 2002, but the rate of growth has slowed for 2008.

The district's financial position is very strong, characterized by three consecutive years of operating surpluses and a high unreserved general fund balance. The fiscal 2007 total fund balance increased to $12.6 million or a high 34.3% of expenditures and transfers out. The unreserved general fund balance was $9.1 million (24.8%). If needed, the district could also use funds from its special reserve for capital projects, which includes an additional $5.1 million.

The series 2008 bonds represent the second and final issuance from a $21.5 million Proposition 39 authorization approved by 74% of voters in November 2005. The bonds are secured by an unlimited ad valorem pledge on all taxable property within the district and will fund the construction of a performing arts center, two classroom wings, and a multi-purpose room. The district's overall debt burden is low at $5,861, or 1.45% of total assessed value. Because the district's future capital needs are low and it sets aside money to finance capital improvements, it has no foreseeable needs for future debt issuance.

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Fitch Ratings
Scott Monroe, +1-415-732-5618 (San Francisco)
Karen Ribble, +1-415-732-1756 (San Francisco)
Christopher Kimble, +1-212-908-0226
(Media Relations, New York)