BASA AdminiScope, August 2020

President’s Message By Greg Denecker

Credit Rating Considerations for School Districts By Marvin Founds, Director, Baker Tilly Municipal Advisors

Welcome back to a new school year! Any - thing been going on in your district this summer, or was it laid-back and boring? OK . . . Don’t answer that!! Obviously, we

Since the Great Recession, many school districts have increased available cash positions due to strong recoveries in property values and taxes, state support and school income taxes. Expenditures were also examined during this time and many beneficial adjustments were made. Policies to identify targeted balances and procedures to head off a future drain on funds have been a focus for many districts since the recession. School districts that have been successful in these efforts are in better position to address the residual effects of COVID-19. School districts in Ohio are generally rated by Moody’s Investors Service (Moody’s), Standard and Poor’s Global Ratings (S&P) and/or Fitch Ratings (Fitch). These rating agencies are evaluating many school districts through annual surveillance procedures with an emphasis on the effects COVID-19 may be having on school district finances and operations. Questions by the rating agencies include what changes, if any, there may be in state funding, local tax collections and tax base, state and fed- eral stimulus programs, local business activity, instructional delivery systems (in-person and remote), cybersecurity, ballot initiatives and related voter outcome and other budgetary considerations that could impact credit ratings. Additionally, Moody’s has proposed a new rating methodology for U.S. K-12 public school districts. The proposed methodology increases the emphasis on residential income, enrollment trends, avail- able fund balances and net cash ratios, and makes changes to long-term liability calculations. Given the expected modifications in methodology, Moody’s estimates that 10% of its rated schools districts nationally could possibly receive rating downgrades, while an equal 10% could receive rating up- grades. The remaining 80% are expected to be unchanged. As school districts work through the current environment, they will have an opportunity to evaluate appropriate levels of targeted available balances, budgetary set-asides and policies affecting their financial position based on the knowledge gained from the economic impact of COVID-19. About Baker Tilly (www.bakertilly.com ) Baker Tilly Municipal Advisors work with communities to help improve operations and resolve financial issues. As a certified public accounting firm, we pair the ethics, structure, quality control and business discipline of a CPA firm with the skills and knowledge of a strategic municipal advisor. We specialize in advising school districts, as well as state and local governments, utilities, libraries and economic development organizations.

are in for probably the most challenging school year of our ca - reers. Our reaction to this time as superintendents will impact our students, staff, parents, and communities. My heart goes out to all of the brand new superintendents, especially those who are new to a particular school district. If you are a veteran administrator, please reach out to these individuals to offer help or to serve as a sounding board. BASA does a great job with the new superintendent program, but our current situation un - derscores the importance of offering and receiving mentorship. With that said, I encourage you to be as positive as possible as you face challenges within your districts and work to navigate the year as a school-wide team. I know this will not be easy. It will take a lot of relationship-building to persevere through this year. Building relationships is the most important element of our roles as district leaders. A strong relationship with board members is critical, not only to the success of the district, but also to your own success and longevity. Keep communication open; take time to listen to concerns, answer questions, and just be available to board members. While you’re not always going to be in agreement, knowing where each person is com - ing from is important. Likewise, be sure to build and nurture relationships with your office staff, administration, certified staff, classified staff, students, parents, and community. Don’t hide in your office. Be visible. Be accessible. At all times, but especially in times of crisis, the positive relationships that you have built will result in a greater likelihood that your school community will trust in your leadership. For those of you that have already begun the school year (in whatever format), I hope your year is off to a great start! For everyone gearing up to open, I wish you the very best. As the school year progresses, please do not hesitate to reach out to other superintendents for advice and discussion. COVID has challenged us to think differently as educators and as admin - istrators. My goal is for all of us to find appropriate timely re- sponses and to even excel in finding new ways to teach, learn, and meet the needs of all students. We are in this together. One mantra that always stuck with me from the new superintendent program through BASA was that nobody can really relate to what you are going through except for other fellow superintendents. Help one another as much as possible during these challenging times. Best of luck for a great 2020-2021 school year!!

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