The grades are in, and Urbana School District 116 has passed. The district received a "AA" rating from Standard & Poor's (S&P) recently, going from an outlook considered "negative" to one that is "stable."
The rating is based on the district's general obligation (GO) outstanding debt, which reflects the city's perceived ability to pay back the bonds it has issued through means such as taxation and income generated from projects it has undertaken.
S&P said the district's participation in the Champaign-Urbana economy was integral to its decision to confirm its "AA" ratings.
"The outlook revision reflects our opinion that the district's financial performance and reserve levels — which had previously been pressured by an imbalanced operating budget — have stabilized sufficiently," credit analyst Scott Nees said. "As such, we no longer believe financial deterioration significant enough to warrant a lower rating is likely in the next two years."
The school district’s achievement was also significant in light of the fact that it had displayed what S&P referred to as an “uneven budgetary performance” of late.
“Historically, the district has carried ample unrestricted cash reserves prior to semiannual debt service payment debts, mitigating potential liquidity risk caused by the uncovered abatement,” Nees said.
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