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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: i-node who wrote (732226)	8/12/2013 1:07:20 AM
From: bentway	Respond to of 1577122

George W. Bush Great Recession

To: i-node who wrote (732226)	8/12/2013 1:09:03 AM
From: tejek	Read Replies (11) \| Respond to of 1577122

The question was, "How do you blame Republicans for the school district having $4 Billion in debt?" If a public entity is in serious debt, can an R not be far behind.

To: i-node who wrote (732226)	8/12/2013 1:11:18 AM
From: tejek	Read Replies (1) \| Respond to of 1577122

Philly Schools' Debt Service Is 10 Times National Average Daniel Denvir City Paper In last week’s article on the Philadelphia School District’s financial crisis, there was a tiny typo with sweeping implications: We wrote that the district will pay $28 million in debt service this fiscal year. In fact, the number is $280 million, or 12 percent of its total budget. What an important zero. The sheer size of that number is a symptom of the problems facing poor school districts — which, in order to survive, plunge themselves into more and more debt. In that way, they’re a lot like poor people. The School District, long underfunded, is a particularly egregious case. Its annual debt-service obligation is up 32 percent from five years ago. And more than half its debt load, or $157.9 million, goes to interest. According to 2011 Census data, districts nationwide paid an average of $155 per non-charter pupil on debt service. Philly spends $1,684 per non-charter student. “Philly has the extreme disadvantage of operating within one of the nation’s least equitable state school-finance systems — which really screws Philly’s operating revenue, likely causing ripple effects,” says Bruce Baker, a Rutgers school-funding expert who included Philly on his annual list of “most screwed” school districts. Wall Street banks, however, profit handsomely from Philly’s suffering. Over the past decade the district has lost $161 million from interest-rate swaps to Morgan Stanley, Goldman Sachs and Wells Fargo, according to the Pennsylvania Budget and Policy Center. The deals were supposed to protect the district from rising borrowing costs, but went sour after interest rates plummeted following the financial crisis. That crisis also led to declining tax revenues for cities and school districts — requiring them to borrow more money from, well, the banks. via School District of Philadelphia. citypaper.net

To: i-node who wrote (732226)	8/12/2013 1:14:07 AM
From: tejek	Read Replies (1) \| Respond to of 1577122

Rating Action: Moody's downgrades Philadelphia School District to Ba2 from Ba1; outlook remains negative SUMMARY RATING RATIONALE The downgrade to Ba2 reflects the district's weak financial position, characterized by extremely narrow operating fund balances and a high level of dependence on annual cash flow borrowing to fund operations. In our view, the district's financial position is unlikely to improve over the medium term given cost pressures related to charter schools, debt service and pensions, and a limited ability to increase revenues to support operations. The Ba2 also reflects the district's weak demographic profile and above-average unemployment, modest property value growth, and a heavy debt burden with moderate exposure to variable rate debt and interest rate swaps. The negative outlook reflects our view that further expenditure reductions may be difficult to achieve given the significant cuts in district services in previous years. Narrow fund balances and liquidity will make it difficult for the district to respond to any unforeseen cost pressures given its lack of financial flexibility. The negative outlook also factors high costs related to charter schools, which accounted for nearly 25% of General Fund expenditures in fiscal 2012. We expect these costs to remain elevated over the near-term. Moody's also maintains an enhanced Aa3 rating, with a stable outlook, on all of the district's direct general obligation debt, reflecting our current assessment of the Pennsylvania School District Fiscal Agent Agreement Intercept Program, which provides for the intercept of state aid due in the current fiscal year in the event of a threatened payment failure by the district. We also maintain an enhanced Aa3 rating on all of the GO-secured debt issued through the SPSBA, reflecting our current assessment of the Pennsylvania State Public School Building Authority Lease Intercept Program, through which the state treasurer withholds appropriated state aid due to the school district and makes payments directly to the bond trustee 30 days in advance of debt service payment dates. The ratings on both programs reflect the credit profile of the Commonwealth itself, whose general obligation bonds are rated Aa2/stable. STRENGTHS -District benefits from state oversight entity -Large, diverse tax base; economic center for a multistate region CHALLENGES -Constrained revenue-raising ability given city control of property tax millage rate -Depletion of reserves and very narrow liquidity requiring annual cash flow borrowing -Above average debt burden -Growing fixed costs related to employee pensions -Opportunities for further cost reductions are difficult to identify -Expenditure challenges related to charter school enrollment growth Outlook The negative outlook on the district's general obligation and lease revenue debt is driven by the district's weak reserve and liquidity levels and that likelihood that reserves and cash balances are unlikely to improve in the near term, even as cost pressures related to charter schools and employee benefits, such as pensions, will remain high over the same period. WHAT COULD MAKE THE UNDERLYING RATING GO UP (REMOVAL OF THE NEGATIVE OUTLOOK) - Progress toward eliminating the structural budget gap over the course of the five-year plan - A return to surplus General Fund operations in the near term - Improvements in cash and reserve levels WHAT COULD MAKE THE UNDERLYING RATING GO DOWN -Continued operating deficits in fiscal 2014 and beyond -Failure to achieve structural balance in fiscal 2015 -Further weakening of liquidity and reserve levels The principal methodology used in this rating was General Obligation Bonds Issued by US Local Governments published in April 2013. Please see the Credit Policy page on www.moodys.com for a copy of this methodology. moodys.com