District is on the money

By Emily Richmond (contact)

Monday, Feb. 13, 2006 | 12:30 p.m.

Solid fiscal management combined with a fast-growing economy have helped the Clark County School District achieve the highest bond rating of any major school district in the nation.

The higher rating will help the district's school construction dollars go farther, ultimately saving money for taxpayers.

Moody's Investors Service has elevated the district's rating to "AA3" from "AA2" - just two notches below the highest possible rank. Moody's cited the district's success in managing and meeting its own "rainy day" reserve requirements.

Among the nation's 10 largest school districts - Clark County is ranked fifth - only Houston has a bond rating as high.

The improved bond rating is "excellent news," said Carole Vilardo, president of the Nevada Taxpayers Association. The district sells about $500 million in bonds each year to help fund the following year's construction projects.

The higher rating means more buyers are likely to be interested, resulting in more competitive bids. And the district will also have to spend less on bond insurance premiums.

Southern Nevada's economic outlook plays a role in the bond rating, "But you can't ignore the fact that it does reflect in great part on the School District and their past performance with their bond issues," Vilardo said.

While some taxpayers may be impressed with strong bond ratings, they also want to see their money spent appropriately, Vilardo said. Dissatisfaction over slow repairs and remodeling at older campuses - while new schools open as scheduled - has been a sore spot for voters statewide, Vilardo said.

"In some ways, Clark County is between a rock and a hard place," Vilardo said. "You know you need additional facilities because of the increased enrollment. At the same time, you have schools built 40 and 50 years ago that have to be refurbished or you'll have to tear them down and rebuild. And there's only a finite amount of dollars that can be used to accommodate all those needs."

The bond sales are part of a 10-year capital improvement plan. Voters in 1998 approved the district's proposal to sell bonds to pay for construction and also extended an additional property tax levy that was due to expire.

The district initially expected to raise $3.5 billion over 10 years for 72 new schools. But higher revenue from skyrocketing property values, coupled with better money management, put the district on track to finish 90 new schools and 11 replacement campuses by 2008.

But district officials also expect to be short by as many as eight elementary schools when the current bond measure expires in 2008. Anticipating the continuing need for new schools, district officials have said they expect to go back to the voters this year for additional funds.

Pat Zamora, vice president of Nevada State Bank Public Finance and an advisor to the School District, compared the effect of the bond rating to a homebuyer seeking a mortgage.

"When your credit score goes up, you can borrow money at a lower cost," Zamora said. "The higher your grade, the more people who are going to want to do business with you."

Zamora said Walt Rulffes, who spent seven years as the district's chief financial officer before being named interim superintendent in July, played an important role in helping improve the rating.

"Walt was very, very good at what he did," said Zamora of Rulffes, who was chosen last month by the School Board to be superintendent full-time. "He's probably one of the best people nationally. I would say the next CFO has big shoes to fill."

Bond ratings "are a fragile thing," Rulffes said.

During the 2003 legislative session, an impasse over education funding raised the possibility of delayed payments to districts from the state. If the district had been forced to use its reserves to cover operational costs, it could have meant a lower bond rating, Rulffes said.

"The quickest way to be downgraded is if the institution gets into any financial trouble and can't get out of it," Rulffes said. "When your programs are well-managed, it works in your favor."

Rulffes said he is planning a nationwide search for his replacement in the business office.

"I want someone who has successful municipal experience," Rulffes said. "One of the things I will look at is the bond rating of their particular agency. That will tell us about their history and whether they are someone who will have credibility with the School Board."

During his seven-year tenure, the superintendents - first Brian Cram and then Carlos Garcia - rarely balked at his fiscal recommendations, Rulffes said.

"I was fortunate that I was able to exercise reasonable influence," Rulffes said.

While he's prepared to hand over the authority of his old job to someone new, Rulffes said he expects the fiscally cautious framework he established to remain in place.

"I'm not going to let this person buy diamonds," Rulffes said with a laugh.

Emily Richmond can be reached at 259-8829 or at emily@lasvegassun.com.