OREANDA-NEWS. (This is a correction to a press release originally published on June 8, 2016. It includes the bonds being separated into two series.)

Fitch Ratings has assigned an 'AAA' rating to the following Simi Valley Unified School District, CA bonds:

-- $68 million 2017 general obligation (GO) refunding bonds (forward delivery);

--$4.5 million 2016 GO refunding bonds.

The bonds will sell via negotiation on or about the week of June 22 and be delivered in May 2017. Proceeds will advance refund outstanding debt for interest rate savings.

Fitch has also assigned an Issuer Default Rating (IDR) of 'A' to the district. The distinction between the 'AAA' bond rating and the 'A' issuer rating reflects Fitch's assessment that bondholders are legally insulated from the operating risk of the district.

SECURITY

The GO bonds are secured by unlimited ad valorem property taxes levied on all taxable property in the district.

KEY RATING DRIVERS

SPECIAL REVENUE ANALYSIS: The 'AAA' unlimited tax general obligation bond rating is based on a dedicated tax analysis without regard to the district's financial operations. Fitch has been provided with legal opinions by district counsel that provide a reasonable basis for concluding that the tax revenues levied to repay the bonds would be considered 'pledged special revenues' in the event of a district bankruptcy. The 'A' IDR reflects the district's weak revenue framework, solid expenditure control and a limited gap closing ability, as well as a very low debt burden.

Economic Resource Base

The Simi Valley Unified School District serves 131,000 residents and 17,400 students in an established suburban bedroom community in Ventura County, California. The district includes the city of Simi Valley (home to the Ronald Reagan Presidential Library) and a small amount of unincorporated land and is located about 37 miles north of downtown Los Angeles.

Revenue Framework: 'bbb' factor assessment

The district is largely reliant on formulaic per pupil funding from the state of California and has no meaningful revenue raising flexibility. Revenue performance has been weak despite recent gains in per pupil funding due to the district's declining enrollment.

Expenditure Framework: 'aa' factor assessment

The expenditure framework is healthy with expenditures generally tracking revenues. Expenditure flexibility is solid with low fixed costs for debt and retiree benefits. Management retains the ability to control labor costs and staffing levels despite a structured bargaining framework.

Long-Term Liability Burden: 'aaa' factor assessment

Debt and pension liabilities are very low relative to the large economic base.

Operating Performance: 'a' factor assessment

Financial resilience through downturns is below average for the sector due to legal constraints on revenue raising and low reserves relative to historical revenue volatility. The district has rebuilt very little financial flexibility in the current economic expansion, positioning it poorly for the next downturn and suggesting significant service reductions will be necessary to maintain balance in the face of revenue declines.

RATING SENSITIVITIES

FINANCIAL PERFORMANCE DRIVES IDR: The Issuer Default Rating could experience downward pressure if reserves fall materially from current levels. It could experience upward pressure if the district built and sustained a more robust reserve position.

TAX BASE DRIVES GO RATING: The general obligation bond rating could come under downward pressure if the district experienced a significant and long-lasting decline in economic activity and property values, which Fitch believes is unlikely.