Rating Action: Moody’s upgrades Santa Maria-Bonita School District, CA’s GOULT bonds to Aa2 and COPs to A1; assigns Aa3 issuer ratingGlobal Credit Research – 14 Apr 2021New York, April 14, 2021 — Moody’s Investors Service has assigned a Aa3 issuer rating to Santa Maria-Bonita School District, CA following the implementation of the US K-12 Public School Districts Methodology published on January 26, 2021. The issuer rating reflects the district’s ability to repay debt and debt like obligations without consideration of any pledge, security, or structural features. Concurrently, Moody’s upgrades to Aa2 from Aa3 the rating on the district’s outstanding general obligation unlimited tax (GOULT) bonds and to A1 from A2 the rating on the district’s Refunding Certificates of Participation, Series 2019. This rating action affects approximately $55.1 million of the district’s debt outstanding rated by Moody’s.RATINGS RATIONALEThe Aa3 issuer rating reflects the district’s below average resident income level, stable enrollment trend and healthy financial profile supported by conservative fiscal practices. The rating also incorporates the district’s moderate leverage and fixed costs burdens.The Aa2 rating on the district’s GOULT bonds is one notch higher than its Aa3 issuer rating. The one notch distinction reflects California school district General Obligation (GO) bond security features that include the physical separation through a “lockbox” for pledged property tax collections and a security interest created by statute.The A1 rating on the district’s Certificates of Participation is one notch below its Aa3 issuer rating, reflecting the contingent nature of the lease payments, abatement risk and the more essential leased asset of a school building. The district covenants to include COP payments in annual budgets, and payments are not subject to appropriation risk.RATING OUTLOOKMoody’s does not usually assign outlooks to local governments with this amount of debt outstanding.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Material improvements in resident income profile- Substantial and sustained growth in reserves and liquidityFACTORS THAT COULD LEAD TO A DOWNGRADE OF TJE RATINGS- Significant declines in reserves or liquidity- Material weakening of enrollment trend- Substantial increase in leverage or fixed costLEGAL SECURITYThe district’s general obligation bonds are secured by an unlimited property tax pledge of all taxable property within the district boundaries. Santa Barbara County, CA (Aa1 stable) and San Luis Obispo County rather than the district will levy, collect, and disburse the district’s property taxes, including the portion constitutionally restricted to pay debt service on general obligation bonds.The district’s Refunding Certificates of Participation, Series 2019 rated by Moody’s are standard California abatement lease obligations secured by lease payments for the use and occupancy of Isaac Fesler Junior High School, which Moody’s views as “more essential”. Lease payments are payable from all of the district’s actively managed general revenue. The COPs are not secured by a reserve fund.PROFILESanta Maria-Bonita School District, CA is located along California’s Central Coast, approximately halfway between San Francisco and Los Angeles. The district operates primarily in the Santa Barbara County and a small portion of San Luis Obispo County. The district provides public education within an approximately 48.2 square mile area and operates 20 schools, including 16 elementary schools and four junior high schools.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. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. 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