Rating Action: Moody's assigns Aa3 issuer rating to William S. Hart Union HSD, CA; confirms Aa2 GO rating and downgrades lease to A1; outlook stableGlobal Credit Research - 30 Mar 2021New York, March 30, 2021 -- Moody's Investors Service has assigned a Aa3 issuer rating to William S. Hart Union High School District, CA. The issuer rating reflects the district's ability to repay debt and debt-like obligations without consideration of any pledge, security or structural features. Concurrently, Moody's confirms the Aa2 rating on the outstanding general obligation (GO) bonds and has downgraded the rating on the district's lease revenue bonds to A1 from Aa3. This action concludes a review for possible downgrade initiated on January 26, 2021 in conjunction with release of the US K-12 Public School Districts Methodology. The outlook has been revised to stable.RATINGS RATIONALEThe Aa3 issuer rating, which reflects the district's standalone credit quality and ability to repay debt and debt like obligations, incorporates the district's strong resident wealth and full valuation per capita that counterweigh the credit effects of gradually declining enrollment. The rating also reflects the district consistent financial profile underscored by solid cash and reserves that we expect will remain in line with historic performance. The district's leverage is a weakness given its high long term liabilities ratio and somewhat elevated fixed costs that are typical for California school districts.The Aa2 rating on the GO bonds is one notch higher than the issuer rating. The one notch distinction reflects California school district GO bond security features that include the physical separation through a "lockbox" for pledged property tax collections and a security interest created by statute.The A1 rating on the lease is one notch below the issuer rating, reflecting abatement risk and the more essential leased asset of a school building. The district covenants to include lease payments in annual budgets, and payments are not subject to appropriation risk.RATING OUTLOOKThe stable outlook reflects our expectation that the district's reserve levels will remain solid for the rating level given management's demonstrated ability to balance operations and maintain sound reserves.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Materially strengthened financial position commensurate with a higher rating level- Substantial strengthening of local resident wealth and income indicators- Lower long term liabilities and fixed costsFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Erosion of financial position including meaningfully lower cash and reserves- Material growth to debt, pension or OPEB liabilities- Acceleration of enrollment declinesLEGAL SECURITYThe district's general obligation bonds are secured by the district's voter-approved unlimited property tax pledge. The county, rather than the district will levy, collect, and disburse the district's property taxes, including the portion constitutionally restricted to pay debt service on general obligation bonds.The lease is secured by lease payments made under a Lease Agreement for the use and occupancy of West Ranch High School. The lease is subject to abatement should there be substantial interference with the use and possession of the leased property. USE OF PROCEEDS N/A PROFILE The William S. Hart Union High School District encompasses 370 square miles in an area of Los Angeles County known as the Santa Clarita Valley, approximately 30 miles from downtown Los Angeles. The district provides educational services to students in grades 7-12 at 17 school locations.METHODOLOGYThe principal methodology used in these ratings was US K-12 Public School Districts Methodology published in January 2021 and available at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1202421. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. 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