Rating Action: Moody's assigns A2 issuer rating to Bamberg County School District, SC and upgrades assumed debt to A2Global Credit Research - 10 Aug 2022New York, August 10, 2022 -- Moody's Investors Service has assigned an A2 issuer rating to Bamberg County School District, SC. Concurrently, Moody's upgraded to A2 from A3 the general obligation bonds that were formerly an obligation of Bamberg-Ehrhardt School District Number One and withdrew its A2 issuer rating after the district was dissolved and incorporated into Bamberg County School District in July 2022, which has since assumed all obligations of the former district. Post consolidation, Bamberg County School District has approximately $67.5 million of general obligation debt outstanding.RATINGS RATIONALEOn July 1 2022, Bamberg County School District was formed with the consolidation of Bamberg-Ehrhardt School District Number One and Denmark Olar School District Two. Subsequently, all assets and liabilities of the two legacy school districts were assumed by Bamberg County School District.The newly consolidated Bamberg County School District's A2 issuer rating reflects its declining enrollment trend, healthy financial position, above average long-term liabilities and manageable fixed costs. The district's rural economy, characterized by little development and below average resident income levels, is offset in part by healthy reserves and liquidity. Though above average, the district's long term liabilities burden is expected to remain manageable over the near term in the absence of any significant borrowing plans.The upgrade of former Bamberg-Ehrhardt School District Number One's GOULT rating to A2 is reflective of a more favorable credit profile of the newly consolidated Bamberg County School District which assumed the former district's debt. Bamberg County School District's credit profile reflects its healthy financial position and manageable fixed costs which offset an above average long term liabilities burden and below average resident income.Governance is a key consideration and remains strong given the smooth transition of former Bamberg-Ehrhardt School District Number One's management to Bamberg County School District and a commitment to maintaining balanced reserves.RATING OUTLOOKMoody's does not typically assign outlooks to local governments with this amount of debt.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Material increases in reserves- Significant decline in leverage- Improvement in resident income indicesFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Material draws on reserves- Significant increase in leverage- Continuously declining student enrollmentLEGAL SECURITYAccording to section 59-17-70 of the South Carolina Code of Laws, upon consolidation of any two or more school districts, all property, real and personal, and all assets of the districts forming the consolidated school district shall become the property of the consolidated district and all liabilities of the consolidating districts shall become the obligations of such consolidated district. In accordance with state statute, on July 1, 2022, the assets and liabilities of the two legacy school districts were transferred to Bamberg County School District.The former Bamberg-Ehrhardt School District Number One's GOULT debt was backed by its full faith and credit pledge applying to its original boundaries,but is now considered a general obligation of the newly consolidated Bamberg County School District. The new school district's GOULT debt is backed by its full faith and credit, and is payable from ad valorem taxes unlimited as to rate or amount on the legacy districts' consolidated tax bases.PROFILEBamberg County School District is located in rural Bamberg County, SC, 94 miles northwest of Charleston, SC (Aaa stable) and enrolls approximately 1800 students.METHODOLOGYThe principal methodology used in these ratings was US K-12 Public School Districts Methodology published in January 2021 and available at https://ratings.moodys.com/api/rmc-documents/70054. Alternatively, please see the Rating Methodologies page on https://ratings.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 on https://ratings.moodys.com/rating-definitions.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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