OREANDA-NEWS. Fitch Ratings has assigned an 'A+' rating to the following Broward County FL School Board's Leasing Corporation certificates of participation (COPs):

--$196,460,000 refunding COPs series 2016A;
--$18,845,000 refunding COPs series 2016B.

Proceeds will be used to refinance a portion of the corporation's outstanding COPs for savings. The COPs are scheduled to sell via negotiation during the week of March 14.

In addition, Fitch affirms the following ratings:

--$1.58 billion outstanding COPs at 'A+';
--$155 million general obligation (GO) bonds issued by the Broward County School District (the district) at 'AA-'.

The Rating Outlook is Stable.

SECURITY

The COPs are secured by lease payments subject to annual appropriation by the Broward County School Board (the school board) under a master lease-purchase agreement with the corporation. Upon certain events of default or the school board's failure to appropriate funds, all leases under the master lease will terminate, and the school board is required to immediately surrender possession of all facilities subject to the master lease.

The GO bonds are backed by the district's full faith and credit and unlimited taxing authority.

KEY RATING DRIVERS

STABLE FISCAL OPERATIONS: Management's budgeting practices have resulted in maintenance of stable, adequate reserves within state and district policy levels. Reserves are expected to rise gradually in the near term improving overall flexibility.

LOW DEBT LEVELS: Debt ratios are currently low and Fitch does not expect them to grow materially with planned issuances of voter-approved GO debt.

SOUND ECONOMIC METRICS: The county-wide tax base has seen notable growth the past three fiscal years after recessionary declines and unemployment rates continue to improve. Income metrics are slightly above average.

COPS APPROPRIATION RISK: The rating incorporates the risk of annual appropriation by the school board and is notched one level below the district's GO rating. The all-or-none appropriation feature of the master lease and the essential nature of leased assets, which are subject to surrender in the event of non-appropriation, temper this risk.

RATING SENSITIVITIES

MAINTENANCE OF RESERVES: The district's continued ability to maintain adequate reserves while addressing operating and capital needs supports rating stability. A decline in reserves to levels below policy targets would pressure the rating.

CREDIT PROFILE

The district serves Broward County (GO bonds rated 'AAA' by Fitch), situated on Florida's Atlantic coast between Miami-Dade and Palm Beach counties. The county is home to 31 incorporated municipalities including Fort Lauderdale, Coral Springs, and Hollywood, and ranks as Florida's second largest county, with an estimated 2014 population of over 1.8 million.

STABLE RESULTS FOR FISCAL 2015

The general fund ended fiscal 2015 with a $16.7 million net operating surplus (0.8% of spending). Unrestricted fund balance totaled $137 million or an adequate 6.9% of spending. Excluding the committed self-insurance funds of $54 million, Fitch calculates available fund balance to be 4.1% of spending, an increase of $2.2 million from fiscal 2014.

The district currently maintains a fund balance policy that requires assigned and unassigned (uncommitted) fund balances to be maintained at a minimum of 3% of revenues, excluding charter school revenues which flow through the district's general fund. The fiscal 2015 level was 4.2% of revenues. Unused contingencies for hurricane and class size penalties helped to support the positive operating results.

The district has stated its intention to increase uncommitted fund balance to at least 6% over the next few years. Fitch believes that gradual growth in fund balance is achievable based on projections of student enrollment growth, the potential for increased state aid and management's monitoring of expenditure growth.

FISCAL 2016 BUDGET MAINTAINS CONSERVATIVISM

The district's fiscal 2016 operating budget of $2.1 billion is supported by an increase in state funding and again includes conservative assumptions. Contingency items, similar to last fiscal year, were included. Management reports that operations are tracking as expected and is projecting a small operating surplus of roughly $2 million to $3 million for fiscal-end 2016. Management's history of prudent fiscal controls suggests that the district's projections appear reasonable and its sound financial profile will be maintained.

DIVERSIFIED COUNTY SUPPORTS SOLID WEALTH LEVELS

The county has a diversified economy with a balance among technology, manufacturing, financial, tourism, construction and retail trade. The top employers include the district and the county as well as Memorial Healthcare System, Broward Health and Nova Southeastern University. County wealth levels are slightly above state and national averages. The county's unemployment rate of 4.5% for November 2016 is down from 5.4% the prior year and reflects in part the 0.9% increase in employment.

DEBT RATIOS TO REMAIN LOW; ABOVE AVERAGE AMORTIZATION

Overall debt ratios remain low at 1.2% of market value and $1,408 per capita. The district has remaining $645 million of authorized GO bonds as part of the $800 million in GO debt approved by voters November 2014. Fitch estimates direct debt outstanding would grow from the current $1.8 billion to $1.99 billion if the remaining authorization was issued within a five year period assuming its current amortization rate. Debt ratios are not expected to change materially given this fairly small increase and Fitch's anticipation for continued economic growth at least in the near term. Par amortization is above average at 60% in 10 years. No additional COPs are planned for issuance at this time.

The district has $179 million in outstanding variable-rate COPs directly placed with three banks. The directly placed COPs are on parity with the district's other outstanding COPs issued under the corporation's master lease purchase agreement. Fitch believes that school districts are more vulnerable to the risks of variable-rate debt than other issuers given their lack of revenue autonomy.

The district is not exposed to risks associated with liquidity agreements, as the series 2014A COPs (which refunded the series 2004D COPs) and series 2015C COPs (which refunded the series 2006B COPs) are index-linked direct placements. Interest rate risk is synthetically fixed via swap contracts with limited termination risk and no collateral posting requirement for the district. The mark-to-market was a negative $52 million as of Feb. 17, 2016.

RETIREMENT COSTS ARE MANAGEABLE

All district employees participate in the state-operated retirement system which Fitch considers adequately funded. Pension and OPEB costs are affordable. Total carrying costs for pension, OPEB pay-go and debt service equaled a low 10% of total fiscal 2015 governmental spending.

LIMITED COP APPROPRIATION RISK

Fitch believes the district has a strong incentive to appropriate for lease payments. An event of non-appropriation would terminate all current leases under the master lease. Approximately 42% of the district's total assets are pledged under the master lease.

While any legally available revenue can be used for COPs debt service, the district has historically made payments from the 1.5-mill capital outlay tax. The district requires 60% or 0.9 mills to fund fiscal 2016 COP debt service and 0.98 mills to fund maximum annual debt service, assuming a 96% tax collection rate.