Rating Action: Moody’s confirms North Huron School District, MI’s GO at A1 & assigns A1 issuer ratingGlobal Credit Research – 25 Mar 2021New York, March 25, 2021 — Moody’s Investors Service has confirmed the outstanding A1 rating on North Huron School District’s Series 2018 general obligation unlimited tax (GOULT) bonds and assigns an A1 issuer rating. The issuer rating reflects the district’s ability to repay debt and debt-like obligations without consideration of any pledge, security, or structural features. The confirmation affects $6.5 million of rated GOULT debt. Concurrently, Moody’s upgrades to A1 from A2 the rating of Port Hope Community Schools, MI’s 2015 Refunding Bonds (General Obligation – Unlimited Tax). Port Hope Community Schools was annexed into North Huron School District effective July 1, 2015. The upgrade affects $885,000 of rated GOULT debt. Both rating actions conclude a review for direction uncertain initiated on January 26, 2021 in conjunction with release of the US K-12 Public School Districts Methodology.RATINGS RATIONALEThe A1 issuer rating balances the district’s healthy operating fund balance and liquidity against its declining student enrollment and above average long term leverage. Additionally factored are the district’s slightly below average resident income indices but strong full value per capita.The rating assigned to the district’s outstanding Series 2018 GOULT bonds is equivalent to the A1 issuer rating and is based on the district’s general obligation full faith and credit pledge as well as an unlimited property tax that is dedicated to debt service.The rating assigned to the Series 2015 Port Hope GOULT bonds is rated at the same level as the issuer rating based on an unlimited property tax dedicated to debt service. While the levy applies just to the legacy Port Hope tax base, key metrics including leverage are immaterially weaker than the consolidated district’s Series 2018 GOULT bonds.RATING OUTLOOKMoody’s does not usually assign outlooks to local governments with this amount of debt.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Stabilization of student enrollment that leads to enhanced budgetary reliability- Sustained increases to operating fund balance and liquidity- Moderation to the district’s long-term liability leverageFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Accelerating enrollment declines that results in declining revenue and decreased budgetary reliability- Narrowing of operating fund balance and liquidity- Significant increases to the district’s long-term liability leverage and related annual fixed costsLEGAL SECURITYThe district’s outstanding Series 2018 bonds were issued post-consolidation and are secured by the North Huron School District’s full faith and credit GOULT pledge. The pledge carries the authority to levy a dedicated and unlimited property tax on all taxable property within the entirety of the consolidated district’s tax base.The outstanding debt issued by the annexed Port Hope Community Schools is secured by a dedicated and unlimited property tax on all taxable property within the original tax base of the annexed district.PROFILENorth Huron School District is located in Huron County in the eastern portion of Michigan’s (Aa1 stable) lower peninsula. The district operates one K-12 school building, and provides education for roughly 350 students in a community of approximately 4,300 residents.METHODOLOGYThe principal methodology used in these ratings was US K-12 Public School Districts Methodology published in January 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1202421. 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