Weekly Credit Outlook for Public Finance - Dec 12 2013

8/13/2019 Weekly Credit Outlook for Public Finance - Dec 12 2013

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MOODYS.CO

DECEMBER 12, 201

FEATURE ARTICLESApproval of Detroit Public Lighting Authority Issuance is CreditNegative

The court overseeing Detroits bankruptcy case approved the citys firstDIP financing, paving the way for the city to move forward with a $60million privately placed loan for improvements to its street light system.

2

Chicagos Credit Helped by State Legislation, Hurt by City Budget

The state assembly may help the city with its pension crisis, but the citys2014 budget that fails to address pension underfunding.

3

New Research Campus Credit Positive for Buffalo, NYA $1.7 billion initiative from Governor Andrew Cuomo aims to lift a cityhurt by population loss, unemployment and stagnant income growth.

5

Minnesotas Budget Forecast Triggers Final Repayment of Long-Delayed Revenues to School Districts

A $1 billion budget surplus will be used to repay nearly $250 million indelayed revenues owed to K-12 public school districts, which were onhold while the state tried to close its budget gap.

7

CREDIT IN DEPTHIllinois Pension ReformProposed legislation reduces the states unfunded pension liability byabout 20%, and if implemented would substantially ease pressure thathas helped trigger five Illinois downgrades since early 2009.

RESEARCH HIGHLIGHTSUS Local Government Ratings Mostly Held Steady Throughthe Downturn

The overall stability of US local governments credit quality throughoutthe economic downturn underscores the sectors inherent strength. Morethan 80% of ratings were unchanged through the downturn.

Community Colleges Flexibility Highlighted in 2012 Medians

The core credit strength of community colleges is their ability to respondand adapt to enrollment volatility, changing economic conditions, andevolving student demands and preferences.

2014 Outlook US Toll Roads: Slow Recovery in Traffic GrowthShows Staying Power

We have changed our outlook on the US toll road industry to stable fromnegative. The stable outlook is based on the view that small, but steady,increases in traffic for toll roads will continue in 2014.

RATING CHANGE HIGHLIGHTSPuerto Rico general obligation and related bonds put on review fordowngradeThe review, affecting $52 billion in debt, was based on theCommonwealth's weakening liquidity, increasing reliance on externalshort-term debt, and constrained market access

Rensselaer Polytechnic Institute's Outlook Revised to Negative, A3Rating AffirmedThe outlook change, affecting $683 million in debt, represents operatingdeficits continuing and debt service coverage remaining thin.

Southern Ohio Medical Center's Outlook Revised to Negative, RatingRemains A2

The outlook change, affecting $144 million in debt, reflects a newcompetitive landscape in SOMC's immediate service area and a moremoderate financial performance.

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2/12

MOODYS WEEKLY CREDIT OUTLOOK: US PUBLIC FINANCE EDITION DECEMBER 12,

Court Approval of Detroit Public Lighting Authority Issuance is Credit Negative

On December 6, the court overseeing Detroits bankruptcy case approved the citys first debtor-in-possessio(DIP) financing since finding the city eligible for Chapter 9 protection. The ruling paves the way for the citto move forward with a $60 million privately placed loan for improvements to its street light system via the

newly created Public Lighting Authority (PLA). The loan is backed by a priority lien on $12.5 million inannual utility tax revenues, which currently flow to the General Fund.

The ruling is negative for Detroits existing creditors as the proposed issuance increases the probability thatfuture operating revenues will be diverted to new creditors, diminishing resources available to pay existingdebt holders.

Under Michigan law, the pledged utility revenues may only be used for the hiring and retention of city policofficers, if the city does not use them for debt service. Even though they are not used to pay existing debtservice on General Obligation Unlimited Tax, General Obligation Limited Tax or Certificates ofParticipation, these revenues provide support for the citys General Fund, and their loss means that the cityGeneral Fund may have fewer resources with which to pay creditors.

The judge ruled that the agreements associated with this financing are the result of good faith negotiationsbetween the city, the PLA and the Michigan Financing Authority. As such, bondholders are unlikely to winany appeal to return utility revenues to the General Fund. The city may divert additional operating revenue

if the court approves its proposed swap termination and quality-of-lifeDIP financings.The city hasproposed a pledge of income tax and gaming revenues for repayment for those DIP financings, along withrevenues in excess of $10 million for the sale or lease of a city asset. These pledges would also result in amodest reduction of resources to satisfy defaulted securities, lowering the prospects for bondholder recovery

Genevieve NolanAssistant Vice President - [email protected]
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Chicagos Credit Profile Helped by State Legislation, Hurt by City Budget

On December 3, the Illinois (A3 negative) General Assembly passed legislation to reform and reduce costsassociated with the states pension systems. This follows the General Assemblys November 6 passage ofsimilar legislation for the Chicago Park Districts (A1 negative) pension plans. These developments are credi

positive for Chicago (A3 negative) because they indicate that the General Assembly may soon address thecitys formidable pension challenges.

Chicagos administration has appealed to state lawmakers to rescue the city from an imminent budget crisis.Illinois Public Act 96-1495, which was signed into law in 2010, requires the city to increase annualcontributions to its Policemens and Firemens pension plans, beginning with an increase of approximately$590 million in budget year 2015. Failure to comply could put Chicago at risk of having the state interceptan equivalent amount in state revenues due to the city. Should the state exercise its option to enforce thispenalty, it would be phased in over a three-year period. To avert this fiscal cliff, city officials have supportedproposed state legislation that would delay the implementation of Public Act 96-1495, including the annualpension contribution increases it requires of the city, until 2022.

To bring about a permanent remedy to Chicagos pension issues, city management has put forth a range ofreform options for the state legislatures consideration, including benefit reductions for existing planparticipants. After years of severe underfunding, the citys pension systems have deteriorated significantly,and reforms are now critical to the plans survival (see Exhibit 1).

EXHIBIT 1

Chicago's Pension Plans in Poor Condition Following Years of Insufficient City Contributions(pension funded ratio as reported by plan actuaries)

Source: Chicago's pension plans actuarial valuations

While the General Assemblys recent actions presumably bring the state a few steps closer to addressingChicagos pension issues, the Chicago City Councils November 26 adoption of the 2014 budget is a

negative credit development because it continues the practice of significant pension underfunding. The 201budget provides for an annual city contribution of $478 million, slightly less than the $479 million that wasbudgeted for 2013. By comparison, the plans annual required contribution (ARC) totaled $1.5 billion in2012. The 2014 budget also fails to set aside resources, either through revenue growth or expenditure cuts,for the estimated $590 million contribution increase that will be required of the city in budget year 2015should current state law stand.

If Illinois law is amended to allow Chicago to postpone the contribution increase beyond budget year 2015,the city will have averted a near-term budget crisis. However, if the current course of underfunding continuactuaries have projected that the systems will begin to reach insolvency as early as 2022. At that point,

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Municipal Employees Laborers Policemen Firemen

achel Cortezice President - Senior Analyst/[email protected]

homas [email protected]


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5/12


New Research Campus Credit Positive for Buffalo, NY

On November 21, New York Governor Andrew Cuomo announced a $1.7 billion initiative to create a cleanenergy research campus inBuffalo, NY(A1 stable), a credit positive for a city that has suffered frompopulation loss, persistent unemployment and stagnant income growth. The state estimates the campus will

create 850 high-tech and 500 construction jobs. The project is the states latest effort to leverage theStateUniversity of New Yorks (SUNY, Aa2 stable) high-tech research initiatives to revitalize struggling areas. Webelieve the campus will help Buffalos efforts to diversify its economy and add more high-skilled, high-payin

jobs.

The public-private project is being led by theSUNY Research Foundation(A1 stable) in cooperation withthe SUNY College of Nanoscale Science and Engineering. The state is making a $225 million investment ininfrastructure and construction of the campus. That grant will be combined with $1.5 billion in privateinvestment from two clean-tech companies, Soraa and Silevo, which will relocate operations to the campusfrom California. Soraa, an LED lighting manufacturer, is expected to create 375 jobs, while Silevo, adeveloper of silicon solar cell technology, is expected to create 475 jobs. The companies will occupy the firstof six anticipated buildings on the 90-acre redeveloped site in south Buffalo and serve as anchors to helpattract other companies.

The state investment is part of a $1 billion multi-year commitment by Gov. Cuomo to boost the Buffaloeconomy and reverse the metro areas negative socioeconomic trends. Since 1990, metro area manufacturingemployment has fallen 44%1and the citys population has declined 20%, while the median family income ithe city has dropped to 58% of the US average.2Unemployment within the city, which was 10.1% in

August 2013, has consistently been above state and national averages.

Over the past decade, the city has made efforts to stem its economic decline by providing incentives to attraand retain organizations in higher-skilled industries. In 2002, the city partnered with a consortium ofhealthcare institutions, including SUNY Buffalo and the Roswell Park Cancer Institute, to develop theBuffalo Niagara Medical Campus, a 120-acre medical center. Since then, while manufacturing employmenthas fallen 29% within the Buffalo metro area, employment in the education/health services sector has risen

20% and professional/business services has increased 24%.3Each of the growing sectors now employs morepeople than manufacturing. The number of jobs in education/health services alone, approximately 92,000(18% of total employment), is about equal to the level of the manufacturing sector in 1990 (see Exhibit 1).

1 US Bureau of Labor Statistics2 US Census Bureau3 Bureau of Labor Statistics

avid Strungisssociate [email protected]

ennis Gephardtice President Senior [email protected]
https://www.moodys.com/credit-ratings/Buffalo-City-of-NY-credit-rating-800004472https://www.moodys.com/credit-ratings/Buffalo-City-of-NY-credit-rating-800004472https://www.moodys.com/credit-ratings/Buffalo-City-of-NY-credit-rating-800004472https://www.moodys.com/credit-ratings/State-University-of-New-York-NY-credit-rating-600037839https://www.moodys.com/credit-ratings/State-University-of-New-York-NY-credit-rating-600037839https://www.moodys.com/credit-ratings/State-University-of-New-York-NY-credit-rating-600037839https://www.moodys.com/credit-ratings/State-University-of-New-York-NY-credit-rating-600037839https://www.moodys.com/credit-ratings/Research-Foundation-of-SUNY-NY-credit-rating-806028525https://www.moodys.com/credit-ratings/Research-Foundation-of-SUNY-NY-credit-rating-806028525https://www.moodys.com/credit-ratings/Research-Foundation-of-SUNY-NY-credit-rating-806028525mailto:[email protected]://www.moodys.com/credit-ratings/State-University-of-New-York-NY-credit-rating-600037839https://www.moodys.com/credit-ratings/State-University-of-New-York-NY-credit-rating-600037839mailto:[email protected]:[email protected]:[email protected]://www.moodys.com/credit-ratings/Research-Foundation-of-SUNY-NY-credit-rating-806028525https://www.moodys.com/credit-ratings/State-University-of-New-York-NY-credit-rating-600037839https://www.moodys.com/credit-ratings/State-University-of-New-York-NY-credit-rating-600037839https://www.moodys.com/credit-ratings/Buffalo-City-of-NY-credit-rating-800004472


6/12

6 MOODYS WEEKLY CREDIT OUTLOOK: US PUBLIC FINANCE EDITION DECEMBER 12,

Buffalo's Education and Professional Service Sectors Each Employ More than Manufacturing

Source: US Bureau of Labor Statistics

The city purchased the new research campus site in 2008 for $4.6 million. The site will likely be tax-exempand therefore not a source of property tax revenue. However, the city expects to see some other indirectbenefits such as increased residential and commercial development, as well as increased sales tax revenue.

Despite the immediate economic benefit, the long-term impact to the region may be limited. The cleantechnology industry is relatively volatile given the uncertainty of future regulation and the pace oftechnological development and its ability to jumpstart a struggling post-industrial economy is untested. Thiprojects ability to spur future development is dependent, in part, on the continued growth of the cleantechnology industry.

SUNYs strategic vision includes helping with job creation and economic development and the state haspartnered with SUNY as an economic engine. SUNYs other economic development projects that leverage i

nanotechnology research include a center inAlbany(A1), which employs more than 3,100 people and hasattracted more than 300 global partners since opening in 2001. A research facility expected to create morethan 1,000 jobs is under construction in the town of Marcy, located outsideUtica(Baa2 negative). In July,Gov. Cuomo announced plans to turn an abandoned Kodak building inRochester(Aa3) into a CSNE solarmanufacturing and technology development facility.

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https://www.moodys.com/credit-ratings/Albany-City-of-NY-credit-rating-600025507https://www.moodys.com/credit-ratings/Albany-City-of-NY-credit-rating-600025507https://www.moodys.com/credit-ratings/Albany-City-of-NY-credit-rating-600025507https://www.moodys.com/credit-ratings/Utica-City-of-NY-credit-rating-600025735https://www.moodys.com/credit-ratings/Utica-City-of-NY-credit-rating-600025735https://www.moodys.com/credit-ratings/Utica-City-of-NY-credit-rating-600025735https://www.moodys.com/credit-ratings/Rochester-City-of-NY-credit-rating-600025697https://www.moodys.com/credit-ratings/Rochester-City-of-NY-credit-rating-600025697https://www.moodys.com/credit-ratings/Rochester-City-of-NY-credit-rating-600025697https://www.moodys.com/credit-ratings/Rochester-City-of-NY-credit-rating-600025697https://www.moodys.com/credit-ratings/Utica-City-of-NY-credit-rating-600025735https://www.moodys.com/credit-ratings/Albany-City-of-NY-credit-rating-600025507


7/12


Minnesotas New Forecast Triggers Final Repayment of Delayed Revenues to SchoolDistricts, a Credit Positive for Minnesota Schools

On December 5,Minnesota(Aa1 stable) released its November forecast of a $1.09 billion surplus for thefiscal 2014-15 biennium. The state had delayed a cumulative $2.7 billion of revenues due to school districts

between fiscal years 2010 and 2013 in order to ease budgetary pressure during the economic downturn. Thestate began repaying the delayed funds to schools just before the end of fiscal 2013 because of improvingeconomic conditions. The November forecast triggers the final repayment of the delayed funds through atransfer of the $246 million due to schools from a state-mandated fiscal 2011 property tax recognition shift,a credit positive. Districts will receive the payment in a lump sum in June 2014.

Starting in fiscal 2010, the state began delaying portions of aid due to schools in order to reduce the statesbudget shortfalls. Typically, Minnesota school districts receive 90% of annual state aid allotments in thecurrent fiscal year and 10% in the next fiscal year. In fiscal 2010, the state reduced that allotment to73%/27%. In fiscal 2011, the state shifted to a 70/30% allotment and in fiscal 2012 the state continued toshift aid payments to an allotment of 60/30%. At its peak, approximately $2.2 billion of state aid wasdelayed to Minnesota school districts. Current law requires that any forecasted surplus at the state level firstbe used to repay delayed revenues owed to K-12 public school districts. Favorably, the payment schedule waimproved to 86.4%/13.6% in fiscal 2013, and in October 2013, the state repaid the full amount of delayedstate aid and shifted back to a normal 90%/10% aid allotment schedule for fiscal 2014 and later.

In fiscal 2011, in order to offset school districts state aid declines on a budgetary basis, the state requireddistricts to count a portion of their property tax revenues early with an offsetting reduction in state aid. Intotal, school districts recognized a total of $550 million of property taxes early. The full $550 million isscheduled to be repaid in June 2014. Repayment of $304 million was authorized in October 2013;repayment of the remaining $246 million in June 2014 was authorized in November 2013.

These delays exerted substantial cash-flow pressures on districts, leading many to deplete cash reserves. Mandistricts that had not previously issued short-term notes for cash flow purposes needed to do so and othersthat had cash flow borrowed in the past greatly upped their issuance amounts. According to state reports,

public school districts aid and tax anticipation borrowing increased nearly six fold between fiscals 2009 and2012, from $137.8 million to $792.3 million. Districts also turned to other sources of funding to offsetdeclines in cash flows. A survey by the Minnesota School Board Association showed a record number ofdistricts went to voters for operating levy referendums in November 2011 compared to previous years.

Historically, Minnesota school districts had maintained large enough General Fund reserves to preclude theneed to cash flow borrow. However, the depleted net cash positions and resulting increase in cash flowborrowing among Moodys-rated school districts had become a credit negative in recent years. Ample cashreserves, net of cash flow borrowing, are generally a positive credit factor that supports higher ratings.Conversely, districts with narrower cash reserves, a sign of credit weakness, are more likely to borrow for casflow purposes and therefore tend to have lower long-term ratings. Looking forward, this final repayment ofdelayed school district revenues should bolster the liquidity of districts throughout the state, a clear credit

positive for the sector.

ndrea [email protected]
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8/12


CREDIT IN DEPTH

Illinois Pension Reform Legislation Is Credit PositiveOn December 5,Illinois(A3 negative) Governor Pat Quinn signed Senate Bill 1, which, according to

legislative documents, reduces the states unfunded pension liability by about 20%, a credit positive.

Although the reforms face a legal challenge from organized labor, if they are implemented we believe they

will substantially ease the pension funding pressure that has helped trigger five Illinois downgrades since ear

2009. Illinois is the lowest-rated US state.

Illinois unfunded pension liabilities, which totaled $100 billion in June 2013 on an as-reported basis, or

$173 billion according to our adjusted net pension liability calculation, are the largest of any US state. The

state General Assemblys passing of SB 1 ends a multi-year impasse over how to reverse severe deterioration

in the states pension funds.

Formal actuarial data on reforms effects await evaluation. The state legislatures preliminary estimate saysthe reforms will lower contributions during the next 30 years by $160 billion in nominal terms to $214

billion, and will put the state pensions on a path to full funding over the next 30 years. The state expects to

reduce its contribution in the first year after implementation by $1.2 billion, or 20%, according to the

legislative figures.

The savings come from reforms affecting current members of the State Employees Retirement System

(SERS), the State Teachers Retirement System (STRS), the State Universities Retirement System (SURS)

and the General Assembly Retirement System (GARS), which account for the bulk of the states unfunded

pension liability. The reforms do not apply to the fifth statewide plan, which is for judges.

Supplemental contributions may help Illinois reach full funding faster.The legislature expects the public

pensions to reach fully funded status in about 25 years, including the effect of supplemental funds providedfor in the law. The previous governing statute required annual state contributions based on a goal of

achieving an actuarial assets-to-liability (funded) ratio of 90% over 50 years.

Supplemental contributions under the latest reforms would come from two sources: 10% of the savings

would be from the reforms, including cost of living adjustment (COLA) changes, and revenue the state is

currently using to provide debt service on pension funding bonds issued in 2010 and 2011. The last of thos

bonds mature during the fiscal year ending June 30, 2019, when debt service requirements will total $900

million. These supplemental funds, which will exceed $1 billion annually starting in fiscal 2020, would

accumulate in the state treasurys Pension Stabilization Fund and be transferred monthly to the pension

systems. However, the state will not use these funds to reduce its base contributions, which under SB 1 mus

be enough to achieve full amortization of unfunded liabilities over 30 years.

Reforms generate savings primarily through changes in COLA policy and other modifications.The state

expects to be able to both reduce its annual funding burden and its pension-accrued liabilities because of

changes to existing COLA and other pension policies. Lower COLAs for workers hired before 2011 accoun

for most of the savings the state expects from the reforms. Prior COLA policy provided these workers with a

3% compounded benefit boost each year. SB 1 provides for a mix of staggered COLA suspensions (see

Exhibit 1), limits on COLA-eligible benefits and the removal of COLA compounding for many workers.

ed Hamptonice President - Senior [email protected]
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9/12


EXHIBIT 1

COLA Suspension Under Illinois Senate Bill 1

Age Group Years of COLA Suspension

50 and older Year 2

47-49 Years 2, 4 and 6

44-46 Years 2, 4, 6 and 8

43 and younger Years 2, 4, 6, 8 and 10

Source: Illinois General Assembly

Workers aged 43 years or younger will face five COLA suspensions. Through age brackets rising to age 50,

the law assigns progressively fewer COLA suspensions; 50-year-old workers are allotted only one. The state

will further cap total benefits on which employees receive COLAs at the lesser of 3% times the total annuity

payable at the time of the COLA or 3% times $1,000, multiplied by years of service (or $800 for those

employees coordinated with Social Security). The state will adjust the dollar multipliers by inflation, but

COLAs no longer will be compounded, with a few exceptions. In addition, the reforms will increase worker

minimum retirement age by as many as 60 months on a sliding scale by age for those younger than 46 yearsas of the effective date. In exchange for these reforms, the law provides some improvements for workers,

including a one-percentage-point cut in employee contribution rates.

Many states have enacted reforms affecting COLA policy.Many states that have enacted pension reforms i

recent years have relied on changes to COLA policy (see Exhibit 2). Illinois reforms may be the largest

reform package implemented by any US state.

EXHIBIT 2

Overview of Legislation Reducing State Pensions Accrued Liabilities

State Rating Elements of Legislative Pension Reform(s)Liability Reduction,

$ Millions

Colorado Aa1 stable COLA caps, increase age/service requirements; contribution rate changes $8,800

Florida Aa1 stable Prospective COLA elimination, employee contribution increase $1,100

Illinois A3 negative COLA policy modifications, increased retirement age, salary cap $21,000

Montana Aa1 stable COLA reductions, increases to both employee and employer contributions $982

New Jersey Aa3 stable COLA elimination, increased retirement age for new employees $18,484

Oklahoma Aa2 stable COLA elimination $5,632

Note: Liability reduction figures are the expected unfunded accrued liability reduction at time reforms were enacted.

Source: Pension-plan comprehensive annual financial reports and other state sources

We expect litigation from employee unions to delay implementation.Whether the reforms withstand our

expectation of litigation remains to be seen. Employee unions assert that the law runs afoul of the stateconstitutions ban on a reduction of public pension benefits. The state supreme court likely will decide whicside is correct, and the legal process will take time. The state legislature estimates that implementation maybe delayed until January 1, 2015. Key legal arguments probably will center on issues such as whetheremployees were given fair compensation and whether COLAs are themselves part of constitutionally shieldebenefits. Judges in some states have held that COLAs differ from the benefits on which they are paid, butothers have seen COLAs as protected by contractual provisions or case law. Such rulings from other states arunlikely to determine the outcome in Illinois courts. An Illinois Supreme Court ruling allowing SB 1 to beimplemented would allow us to fully factor the reforms into our rating.


10/12


RESEARCH HIGHLIGHTS

US Local Government Ratings Mostly Held Steady Through the DownturnThe overall stability of US local governments credit quality throughout the economic downturn underscorethe sectors inherent strengths. We revised our outlook on the local government sector to stable for 2014after maintaining a negative outlook since April 2009. Downgrades began to exceed upgrades in the firstquarter of 2009, and have outpaced upgrades throughout the negative outlook period by an overall ratio ofmore than two-to-one. However, more than 80% of roughly 7,240 general obligation and related ratings

were unchanged through the downturn.

Community Colleges Flexibility Highlighted in 2012 Medians

The core credit strength of community colleges is their ability to respond and adapt to enrollment volatility,changing economic conditions, and evolving student demands and preferences traits the fiscal year 2012medians highlight. Community colleges that levy property taxes are better positioned to deal with thesechallenges than are those that rely primarily on revenue from student charges and state support. This is thefirst time we have published our community college medians, a reflection of the sectors growing importancin US higher education.

2014 Outlook US Toll Roads: Slow Recovery in Traffic Growth Shows Staying Power

We have changed our outlook on the US toll toad industry to stable from negative. The stable outlook isbased on the view that the small but steady increase in traffic for toll roads in 2013 will continue in 2014.

We expect traffic growth of about 1.5% for rated toll roads in 2014 as the US economy strengthens. Thisgrowth rate marks a sustainable comeback from the nearly 3% decline in 2009, when we placed a negativeoutlook on toll roads.

2014 Outlook US Airports: Seat Growth Will Push Enplanements Higher, Underpinning Our StableOutlook

The outlook for the US airport industry remains stable as airlines push up enplanements by adding to theirtotal number of seats. The first quarter of next year will see the first increase in the number of flights inalmost three years. The growth in enplanements, along with de-leveraging at midsize and small airports, wilblunt the impact of higher debt service at the large hub airports. Numerous major hubs have taken on moredebt to fund terminal renovation projects.
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11/12


RATING CHANGE HIGHLIGHTS

Puerto Rico general obligation and related bonds put on review for downgradeDec. 12 We put general obligation debt for the Commonwealth of Puerto Rico, rated Baa3, on review fordowngrade. At the same time, ratings that are capped by or linked to the commonwealth's GO rating werealso placed on review, including the Puerto Rico Sales Tax Financing Corporation's (COFINA's) senior and

junior lien bonds. The debt affected is more than $52 billion. The decision was based on theCommonwealth's weakening liquidity, increasing reliance on external short-term debt, and constrainedmarket access, within the context of a weakened and now sluggish economy. These developments exacerbatethe longstanding financial strain brought by the commonwealth's very high debt load and pensionobligations, as well as its chronic budget deficits.

Rensselaer Polytechnic Institute's Outlook Revised to Negative, A3 Rating Affirmed

Dec. 9 As we affirmed Rensselaer Polytechnic Institute's (NY)(RPI) A3 rating, we changed the outlook to

negative from stable because we expect operating deficits to continue to be negative and debt service coveragto remain thin, with multi-year declines in expendable financial resources. The A3 rating is based on RPI'slarge scale of operations, stable market position, healthy growth of net tuition per student and improvedliquidity position. The lessening of risk in its debt structure in recent years counterbalances the institutesvery high leverage and sizeable pension liability. The institute's pension plan is underfunded and alsoburdens operations. RPI has $683 million in rated debt.

Southern Ohio Medical Center's Outlook Revised to Negative, Rating Remains A2

Dec. 4 We changed the outlook to negative from stable on Southern Ohio Medical Center's (SOMC) A2rating, which is assigned to $144.4 million of bonds issued by the County of Scioto, Ohio. The action wasbecause of a new competitive landscape in SOMC's immediate service area. The revised outlook also reflectsthe organization's more moderate financial performance in fiscal year 2013 and a fiscal year 2014 budget th

anticipates breakeven operations and a reduction in liquidity. As we changed the outlook, we affirmed the Arating to reflect SOMC's growth in unrestricted cash and investments, conservative debt and capital structuand dominant market share position.
https://www.moodys.com/research/Moodys-places-Puerto-Rico-general-obligation-and-related-bonds-on--PR_288376https://www.moodys.com/research/Moodys-places-Puerto-Rico-general-obligation-and-related-bonds-on--PR_288376https://www.moodys.com/research/Moodys-places-Puerto-Rico-general-obligation-and-related-bonds-on--PR_288376https://www.moodys.com/research/Moodys-places-Puerto-Rico-general-obligation-and-related-bonds-on--PR_288376https://www.moodys.com/research/Moodys-revises-Rensselaer-Polytechnic-Institutes-NY-outlook-to-negative-A3--PR_288589https://www.moodys.com/research/Moodys-revises-Rensselaer-Polytechnic-Institutes-NY-outlook-to-negative-A3--PR_288589https://www.moodys.com/research/Moodys-revises-Rensselaer-Polytechnic-Institutes-NY-outlook-to-negative-A3--PR_288589https://www.moodys.com/research/Moodys-revises-Rensselaer-Polytechnic-Institutes-NY-outlook-to-negative-A3--PR_288589https://www.moodys.com/research/Moodys-revises-Southern-Ohio-Medical-Centers-OH-outlook-to-negative--PR_288184https://www.moodys.com/research/Moodys-revises-Southern-Ohio-Medical-Centers-OH-outlook-to-negative--PR_288184https://www.moodys.com/research/Moodys-revises-Southern-Ohio-Medical-Centers-OH-outlook-to-negative--PR_288184https://www.moodys.com/research/Moodys-revises-Southern-Ohio-Medical-Centers-OH-outlook-to-negative--PR_288184https://www.moodys.com/research/Moodys-revises-Southern-Ohio-Medical-Centers-OH-outlook-to-negative--PR_288184https://www.moodys.com/research/Moodys-revises-Rensselaer-Polytechnic-Institutes-NY-outlook-to-negative-A3--PR_288589https://www.moodys.com/research/Moodys-revises-Rensselaer-Polytechnic-Institutes-NY-outlook-to-negative-A3--PR_288589https://www.moodys.com/research/Moodys-places-Puerto-Rico-general-obligation-and-related-bonds-on--PR_288376https://www.moodys.com/research/Moodys-places-Puerto-Rico-general-obligation-and-related-bonds-on--PR_288376


12/12

MOODYS.CO

CREDIT RATINGS & ANALYSIS

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John Nelson

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Christopher HolmesDirector of Research, US Public Finance

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Naomi RichmanManaging Director, US Public Finance

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Tim BlakeManaging Director, US Public Finance

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Documents

Weekly Credit Outlook for Public Finance - Dec 12 2013