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Moody's Downgrades Hendrick Hudson School District

The district reacts to its downgraded credit rating.

The international credit rating agency Moody's downgraded the from Aa3 to A1 in November. The downgrade came following the district’s request for Moody’s to review its credit as it prepared to refinance several bonds from 2003. Moody's released the news three weeks before the public overwhelmingly voted down a new

Despite the downgrade, district representatives say they remain confident in its financial stability and says the downgrade changes the district's borrowing interest rate by an increase of .1 percent.

Moody's press release on the downgrade, posted Nov. 23, said: "The downgrade is based on the continually deteriorating financial condition with no viable recovery plan as well as the additional challenges posed by the New York state tax cap."

Moody's reported that the district’s credit rating strength is it’s sizable tax base with above average wealth levels. The district’s challenges are establishing structural budgetary balance, declining tax valuations and the property tax cap, according to Moody's.

Moody's also noted that a significant increase in the debt burden could make the rating go down further. The district held the vote on the on Dec. 14, which the public o

Read Moody's full press release here.  

The district released the following statement regarding the change in its rating:

The Hendrick Hudson School District was recently notified by Moodys, the international credit rating agency, that its credit rating was downgraded to A1 from Aa3.  According to Moodys, “The A1 rating reflects the district's sizeable tax base with above average wealth levels, average debt burden and narrowing financial position.”

Despite the rating change, the Hendrick Hudson School District remains in the upper ranks of the Moody’s rating system. Earning a distinction of an “A” credit rating means obligations are considered “upper-medium grade and are subject to low credit risk.”

The credit rating change came as a result of a request by the district for a credit rating review as it prepared to refinance several bonds from 2003.  The refinance resulted in a savings of $630,000 over the next ten years.

While the downgrade is a disappointment, it is unfortunately due in large part to forces outside the districts control including, the pending tax cap, and declining revenues due to a lackluster housing market. The district is also facing challenges other schools are having in terms of declining property values and significant reductions in state aid.

 “While we were certainly disappointed with the change, it really didn’t come as a huge surprise.  Moodys and the other credit agencies have been revaluating credit ratings for almost all credit bearing agencies.  The change is more a reflection of what is taking place economically on a state and federal level than it is about our financial health,” said Rick McCormack, Public Relations Coordinator for the Hendrick Hudson School District.

“The same day Moodys notified us of the change, they notified one hundred+ other agencies of similar changes in their credit rating. More importantly though, the actual change will have little impact on our day-to-day operations and finances.  In fact, our recent refinancing came in the wake of the change and it resulted in just a .1% increase in our borrowing rate.”

“We remain confident in the state of our financial health and our ability to meet our obligations,” concluded McCormack.

Editor's Note: The article has been adjusted to include more details on the downgrade, including statement's from Moody's press release. Also, Moody's downgraded the distrcit from Aa3 to A1 in November. The original article reversed the order of the ratings. We regret the error.

Liz Giegerich December 29, 2011 at 04:00 AM
Thanks for the important comments Laura and John. This was originally just a posting of the district's press release with a quick intro but I have added more from the Moody's press release and linked to it in the article. I will follow up on this story to get more information from the district. Thank you for commenting.
terryclinez December 29, 2011 at 06:05 AM
Want to refinance your mortgage to a new lower interest rate? You should - the money you save could be so significant even with 1 or 2% reducation check 123 Refinance and learn how refinance can affect you.
liz December 29, 2011 at 03:39 PM
This comment does not pertain to the story and I do believe it may be inappropriate. Should you be thinking of a refinance be mindful of the rate, points charged and other fees. Also, many scams exist, so check out the reputation of the mortgage banker!
John Mattis December 29, 2011 at 04:20 PM
Liz, when you follow up, find out when the school board was notified of this downgrade. Apparently they did not know this on the day of the election and were informed only after it was brought to light by a few taxpayers. They were blindsided, not a good thing.
John DeBenedictis December 30, 2011 at 03:30 PM
So you’re saying the real cost of the bond would have been much more and the public was misinformed. I wonder what other facts were conveniently left out about the meadowlands Jr. plan. This is similar to a car dealer wanting more money when you arrive for delivery after having agreed to a price. This begs the question “would you buy a used car from Hendrick Hudson”. This is one more reason the public was correct in rejecting the bond. So much for open and fair communications.

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