Moody's Credit Upgrade

NEWS RELEASE: Moody’s Revised San Marcos Unified School District’s Rating
Posted on 08/30/2022

Moody’s Revised San Marcos Unified School District’s Rating Outlook from Negative to Stable

San Marcos, Calif. August 30, 2022. San Marcos Unified is excited to share that Moody’s Investors Service has recently affirmed the district’s credit ratings, and the rating outlook was revised from negative to stable. 

This positive outcome came largely due to the improved outlook of the district's financial position resulting from actions taken by the Governing Board and Administration to eliminate ongoing deficit spending in 2022-23 through implementation of its fiscal stabilization plan. In its published credit opinion, Moody’s noted that the “difficult but necessary” budget reductions were approved by the Governing Board in 2022, and the “new leadership team has shown commitment to improving operations through the implementation of tighter position controls, an emphasis on transparency and engagement with the board and community.”

Moody’s is one of the three leading credit rating agencies in the nation, which rates the district, its general obligation (GO) bonds and other financings. Rating agencies assign credit ratings based on their independent and in-depth review of the issuer and credit risks of their debt – allowing issuers to efficiently access debt markets and investors to make informed investment decisions. Similar to an individual’s credit scores issued by the top credit bureaus, the primary benefit of a high credit rating is lower interest costs and issuance costs. In the case of the Prop. K GO bonds, lower interest costs directly translate to taxpayer savings. 

In October 2017, Moody’s changed its rating outlook on the district’s ratings to negative reflecting its view that the district’s financial position would continue to narrow and that a rating downgrade would be likely if the structural imbalances were not improved. The Governing Board has continued the efforts to close the expenditure gaps since then, while staying committed to providing an unparalleled educational experience to all students of the district. Moody’s surveilled the district again in June 2019, December 2019 and March 2021 but maintained the negative outlook. 

In August 2022, the district was able to report a number of positive updates to Moody’s. Erin Garcia, Assistant Superintendent of Business Services led the credit update presentation. 

“We are extremely pleased that an independent outside agency has validated the hard work done last year to stabilize the district’s budgets,” said district Superintendent, Dr. Andy Johnsen. “It would not have been possible without the Board’s leadership and the thoughtful and transparent process that the Board and the Administration undertook.” 

The community can find more information regarding Moody’s Investors Service’s rating methodology, rating symbols and definitions on its website

A copy of Moody’s press release on the revision of the district’s outlook from negative to stable is available here.