York County School of Technology Auth., PA — Moody’s downgrades York County School of Technology, PA’s revenue rating to A2; assigns A2 issuer rating

Rating Action: Moody’s downgrades York County School of Technology, PA’s revenue rating to A2; assigns A2 issuer ratingGlobal Credit Research – 18 Mar 2021New York, March 18, 2021 — Moody’s Investors Service has assigned an A2 issuer rating to York County School of Technology, PA. The issuer rating reflects the school’s ability to repay debt and debt-like obligations without consideration of any pledge, security, or structural features. Concurrently, Moody’s has downgraded the revenue rating on the school’s bonds to A2 from A1, affecting $22.5 million in rated debt outstanding. This action concludes a rating review initiated on January 26, 2021 in conjunction with release of the US K-12 Public School Districts Methodology. Moving forward, Moody’s will be rating the revenue bonds under the York County School of Technology instead of the York County School of Technology Authority.Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBM_PBM907006993 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and identifies each affected issuer.RATINGS RATIONALEThe school’s A2 issuer rating reflects its narrow reserve position, the result of a practice of returning excess revenues to its participating school districts. However, additional financial flexibility is provided by the school’s historically conservative budgeting, which includes an annual buffer for unexpected expenditures. The rating also considers the school’s above average resident income, stable enrollment, moderate leverage, lack of near term borrowing plans, and modest fixed costs.The revenue rating was downgraded one notch because it is equivalent to the A2 issuer rating, as the revenue rating reflects York County School of Technology’s non-contingent general promise to pay its debt service in the form of lease rental payments.We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. The pandemic has not had a material impact on the school, as it receives its revenues from its participating school districts, state aid, and federal grant money.RATING OUTLOOKOutlooks are not typically assigned to local governments with this amount of debt outstanding.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Materially improved reserves- Sustained enrollment growth- Strengthening of resident wealth and income- Significant reduction in leverageFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Material decline in reserves- Enrollment declines- Deterioration of resident wealth and income- Significant increase in leverageLEGAL SECURITYThe school’s debt is secured by lease rental payments made to the York County School of Technology Authority, paid from capital cost payments made by the participating school districts and all available revenues. The school is the lessee of the facility from the authority.Debt service – in the form of lease rental payments – is paid to the trustee, as assigned by the authority. The below-mentioned participant school districts are obligated to pay allocable shares of any rentals payable by the school, including the lease rentals. Moreover, a participating school district’s withdrawal from the school of technology does not relieve the district of its obligation to pay its allocable share of lease rentals. That said, the obligation to make such payments is not a statutory or constitutional debt obligation of the participating school districts, and the taxing power of the participating school districts are not specifically pledged therefor.PROFILEYork County School of Technology is an Area Vocational Technical School created pursuant to the provisions of the Pennsylvania School Code of 1949 for the purpose of providing vocational, technical and career education to the students in its participating districts (Central York School District, Dallastown Area School District, Dover Area School District, Eastern York School District, Hanover Public School District, Northeastern York School District, Red Lion Area School District, South Eastern School District, South Western School District, Southern York County School District, Spring Grove Area School District, West York Area School District, York City School District, and York Suburban School District). The school enrolls approximately 1,700 students and is one of the largest such institutions in the commonwealth. It provides 25 different programs to students, including, carpentry & construction management, criminal justice, culinary arts, diesel technology, electronics/IT support , engineering /advanced manufacturing, licensed cosmetology, network systems & cyber security, medical professions, and welding & metal fabrication technology.METHODOLOGYThe principal methodology used in these ratings was US K-12 Public School Districts Methodology published in January 2021 and available at http://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 DISCLOSURESThe List of Affected Credit Ratings announced here are all solicited credit ratings. Additionally, the List of Affected Credit Ratings includes additional disclosures that vary with regard to some of the ratings. Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBM_PBM907006993 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody’s disclosures on the following items:- Rating Solicitation- Issuer Participation- Participation: Access to Management- Participation: Access to Internal Documents- Disclosure to Rated Entity- EndorsementFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. 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