Rating Action: Moody's upgrades Bertha-Hewitt ISD 786, MN's GO to A1; assigns A1 issuer ratingGlobal Credit Research - 17 Feb 2021New York, February 17, 2021 -- Moody's Investors Service has assigned an A1 issuer rating to Bertha-Hewitt Independent School District 786, MN and concurrently upgraded the district's outstanding general obligation unlimited tax (GOULT) bonds to A1 from A2. This action concludes a review for possible upgrade initiated on January 26, 2021 in conjunction with the release of the US K-12 Public School Districts Methodology. The action affects $7 million in Moody's rated GOULT bonds.RATINGS RATIONALEThe A1 issuer rating, which reflects the district's general credit quality and ability to repay debt and debt-like obligations, incorporates the district's reserves and liquidity that will remain strong for the next several years. Per capita wealth is moderate while enrollment trends are favorable. Total leverage is moderate, and fixed costs are manageable. Resident incomes remain below the national median, and the district's small operating size limits expenditure flexibility and exposes the budget to event risks.The A1 GOULT is equivalent to the A1 issuer rating given the district's full faith and credit with authority to raise ad valorem property taxes unlimited as to rate or amount.RATING OUTLOOKMoody's does not usually assign outlooks to local governments with this amount of debt.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Improved resident incomes and wealth- Sustained increase in operating reserves and liquidity- Reduction in leverageFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Sustained enrollment declines- Decline in operating reserves or liquidity- Increase in long term leverage or fixed costsLEGAL SECURITYThe district's GOULT bonds are secured by the district's full faith and credit pledge and the authority to levy a dedicated property tax unlimited as to rate and amount. The bonds are also secured by statute.PROFILEBertha-Hewitt I.S.D. 786, MN is located 153 miles northwest of the City of Minneapolis (Aa1 stable) and provides education for approximately 490 K-12th grade students.METHODOLOGYThe principal methodology used in these ratings was US K-12 Public School Districts Methodology published in January 2021 and available at https://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. 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