Fitch Downgrades Natomas USD, Outlook Negative

Fitch Ratings has downgraded the Natomas Unified School District’s $60.6 million general obligation bonds from A- to BBB.
Fitch Ratings also changed the “Rating Watch Negative” to “Rating Outlook is Negative” because:
  • Significant financial pressure facing the district and Fitch’s expectation that such pressure will continue.
  • Significant ongoing structural imbalance and projections through fiscal 2013 include cash flow shortfalls attributed to a difficult state funding environment, mis-estimates by management, onerous labor agreements, and significant declines in student enrollment.
  • Over the past year the district’s financial flexibility was largely eliminated.
  • The district’s ability to achieve structural balance and rebuild reserves primarily through labor concessions likely will be hindered by labor’s lack of confidence in management.

Read more here.


  1. Also included in the report: “Recent changes to management, including the appointment of a new superintendent, are resulting in more prudent management practices. For fiscal 2011, the district has continued its hiring freeze, received a waiver to increase class sizes above the state cap, implemented significant layoffs, employed more realistic student enrollment projections, and reduced departmental budgets in an effort to narrow the budget imbalance. While necessary, these expenditure reductions have compromised the district’s financial flexibility. Nevertheless, the district must identify at least an additional $8.9 million in ongoing expenditure reductions to counter the negative cash flow projections for fiscal years 2012 and 2013. At this time, the only source for this level of expenditure reductions appears to be the district’s personnel budget. The current prolonged labor negotiations suggest that obtaining such personnel reductions, and future personnel concessions if needed, will be difficult.”

    Then there’s this: “Located in the northwestern portion of Sacramento County, the district is home to 27,661 residents.” Huh? I realize the Natomas Basin is served by both Natomas and Twin Rivers districts, but that figure seems really low to me. I wonder where they got that number from…

  2. Oh, and folks, you shouldn’t give the article a low rating due to it being bad news. It’s not a “happiness” indicator, it’s a representation of the quality of the article. I hate what the article is saying about the pathetic state of our school district’s finances, but the article itself is timely and well-written.

Speak Your Mind