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Rating Action: Moody's removes negative outlook on Cambridge-Isanti ISD 911, MN; affirms A1 issuer and A2 COP ratings; assigns A1 UND/Aa2 ENH to new GO bondsGlobal Credit Research - 13 Jan 2022New York, January 13, 2022 -- Moody's Investors Service has removed the negative outlook from Cambridge-Isanti Independent School District 911, MN and assigned A1 underlying and Aa2 enhanced ratings to the district's $27.3 million General Obligation Facilities Maintenance and School Building Refunding Bonds, Series 2022A. Moody's has also affirmed the district's A1 issuer rating and the A1 underlying rating on its outstanding general obligation unlimited tax (GOULT) bonds and A2 on its outstanding certificates of participation. The issuer rating reflects the district's ability to repay debt and debt-like obligations without consideration of any pledge, security, or structural features. The district has about $53 million of GOULT bonds and $13.5 million of COPs outstanding.RATINGS RATIONALEThe A1 issuer rating reflects the district's growing local economy, which benefits from its location north of the Twin Cities metropolitan area. Full value per capita and adjusted resident income are solid. Reserves recently increased because of federal stimulus and will likely continue to grow over the next year because of conservative budgeting. Enrollment rebounded after falling at the beginning of the pandemic and will likely stabilize going forward. Long-term liabilities are somewhat above average and fixed costs are low.The A1 GOULT rating is the same as the issuer rating based on the district's full faith and credit pledge and the authority to levy a dedicated property tax unlimited as to rate and amount.The A2 COP rating is one notch below the issuer rating, reflecting the contingent nature of the pledge, which is subject to annual appropriation, and the more essential leased asset which is a school building.The Aa2 enhanced rating reflects the additional security provided by the Minnesota School District Credit Enhancement Program. The programmatic rating is notched once from the state's Aa1 general obligation unlimited tax (GOULT). The enhanced rating reflects sound program mechanics and the state's pledge of an unlimited appropriation from its General Fund should the district be unable to meet debt service requirements. The program's mechanics include a provision for third party notification of pending deficiency. If the district does not transfer funds necessary to pay debt to the paying agent at least three days prior to the payment due date, the state will appropriate the payment to the paying agent directly.RATING OUTLOOKMoody's does not typically assign outlooks to local governments with this amount of debt outstanding.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Materially improved cash and fund balance- Material reduction in debt and pension leverage- Upgrade of state rating (enhanced rating only)FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Material declines in cash and fund balance- Substantial increase in debt and pension burdens- Downgrade of state rating (enhanced rating only)LEGAL SECURITYThe district's GOULT bonds are backed 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 secured by statute, but there is no lockbox structure.The outstanding COPs are backed by the district's pledge to make rental payments sufficient for annual debt service requirements, subject to annual appropriation.The bonds are additionally backed by the Minnesota School District Credit Enhancement Program, which provides for an unlimited advance from the state's General Fund should the district be unable to meet debt service requirements.USE OF PROCEEDSProceeds finance facilities maintenance projects and refund the district's Series 2012A bonds.PROFILECambridge-Isanti ISD No. 911 is located about 47 miles northwest of the Twin Cities metropolitan area, in Isanti (Aa3) and Chisago (Aa2) Counties. The district is comprised of the cities of Cambridge, Isanti and all or parts of 13 townships. The district currently provides comprehensive educational programs for students in pre-kindergarten through the twelfth grade.METHODOLOGY The principal methodology used in the underlying 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. The principal methodology used in the enhanced rating was State Aid Intercept Programs and Financings published in December 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1067422. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies. 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. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. 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