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Twp. retains 'AA' bond rating from Standard & Poor's

Sizeable reserves, sound management practices lead to 'stable' outlook

June 12, 2013 - Once again, Oxford Township received the second highest credit (or bond) rating from Standard & Poor's.

The well-known financial services company affirmed its 'AA' long-term credit rating for the township.

An 'AA' rating means the township has a "very strong capacity to meet financial commitments."

"Double-A is a very solid credit rating," said township Treasurer Joe Ferrari. "It just shows that despite the economic downturns that we've faced, the township board has done a really good job of budgeting and keeping its expenses in check."

Standard & Poor's credit ratings express the firm's opinion about the ability and willingness of a corporation, state or municipal government to meet its financial obligations in full and on time.

These ratings can also speak to the credit quality of an individual debt issue, such as a municipal bond, and the relative likelihood that the issue may default.

Standard & Poor's rating system ranges from the highest 'AAA,' which denotes an extremely strong capacity to meet financial commitments, to the lowest 'D,' which represents default on financial commitments.

According to the company's website, a 'AA' credit rating differs from the highest rating "only to a small degree."

The township's 'AA' rating was accompanied by a "stable" outlook, which means it's "not likely to change" in the next two years.

The township's hefty cash reserves (or fund balance) and sound management practices were cited in Standard & Poor's report as the primary reasons for this very positive rating and stable outlook.

Although the township's total taxable value has dropped by 26 percent since 2008, bringing it down to $665 million, the report stated, "the township is projecting at least break-even operations in 2013 and very strong reserves, despite a minor deficit in 2012."

"The township reported a $68,000 deficit in 2012, drawing down the fund balance to $2.63 million, or what we view as a very strong 165 percent of expenditures," the report stated. "Township officials structured a break-even 2013 budget, but management anticipates finishing the year with a modest surplus."

"I think the township has done very well over the years," Ferrari said. "We're very fortunate to have a good management team that's conscientious, works hard and always knows to watch the taxpayers' dollars."

Standard & Poor's report noted the township's stable outlook "reflects our anticipation that township officials will continue to make budget adjustments as they deem necessary to offset any future revenue shortfalls and maintain a structurally balanced budget."

"If taxable values in the township continue to fall at rates similar to those of previous years, negatively affecting revenue and causing reserves to fall substantially, the rating could come under pressure," the report stated.

However, Standard & Poor's noted, "The township's very strong financial reserves provide additional stability and we do not foresee changing the rating in the two-year outlook horizon."

"They understand that even though we're spending on other projects – like cemeteries, safety paths, things like that – we're still keeping a good fund balance in case there is another downturn," Ferrari said.

CJ Carnacchio is editor for The Oxford Leader. He lives in the Village of Oxford with his wife Connie and daughter Larissa. When he's not busy working on the newspaper, he enjoys cigars/pipes, Martinis/Scotch, hunting and fishing.
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