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Moody's assigns initial A1 issuer rating to Berkshire LSD, OH; assigns A1 UND/Aa2 ENH to GOULT & A2 to COPs

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Rating Action: Moody's assigns initial A1 issuer rating to Berkshire LSD, OH; assigns A1 UND/Aa2 ENH to GOULT & A2 to COPsGlobal Credit Research - 18 Mar 2021New York, March 18, 2021 -- Moody's Investors Service has assigned an A1 issuer rating to Berkshire Local School District, OH. The issuer rating reflects the district's standalone credit quality and ability to repay debt and debtlike obligations without consideration of any pledge, security or structural features. Concurrently, Moody's has assigned an A1 underlying rating and Aa2 enhanced rating to the district's $25.9 million Refunding Bonds, Series 2021 (General Obligation - Unlimited Tax) and an A2 to the $4 million Certificates of Participation (Berkshire Local School District, Geauga County, Ohio, School Facilities Project), Series 2021. Following the upcoming issuance, the district will have $25.9 million in general obligation unlimited tax (GOULT) debt and $4 million in certificates of participation (COPs), all of which is rated by Moody's.RATINGS RATIONALEThe A1 rating reflects the district's healthy financials, growing enrollment, and above average resident wealth levels. It also incorporates an elevated long-term liabilities ratio driven by the district's participation in an underfunded cost-sharing pension plan and notable increase in debt resulting from a voter approved issuance for a single site campus.The A1 GOULT rating is equivalent to the A1 issuer rating given the district's full faith and credit pledge and authorization to levy a dedicated property tax that is unlimited as to rate or amount.The A2 rating on the COPs is notched once from the district's A1 issuer rating, based on the contingent nature of the appropriation risk and the more essential nature of the pledged assets (school athletic facilities).The Aa2 enhanced rating on the Series 2021 bonds reflects our assessment of the Ohio School District Credit Enhancement Program (OSDCEP), which has a programmatic rating that is one notch below the State of Ohio's Aa1 general obligation (GO) rating and the program carries a stable outlook, reflecting the stable outlook on the State of Ohio. Interceptable funds include the district's annual state aid appropriations, which may continue to be intercepted until a debt service shortfall is fully paid. Estimated fiscal 2021 interceptable aid for Berkshire Local School District provides 3.17x coverage of maximum annual debt service (MADS) on the district's enhanced debt. Program mechanics require a third party fiscal agent to notify the state to intercept aid if debt service is not received at least fifteen days prior to its due date. Once the state confirms that the district is unable to meet debt service payments within three days prior to the debt service payment date, it must deposit the intercepted aid by 2PM the day before debt service is due. The Zions Bancorporation, National Association (long-term counterparty risk rating: Baa1) will sign a paying agent agreement in accordance with the administrative code requirements.RATING OUTLOOKOutlooks are usually not assigned to local government credits with this amount of debt.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS-Reduction in the district's debt burden-Moderation of the district's elevated pension liabilities-Material expansion and diversification of the district's tax base-Upgrade of issuer rating (COPs)-Upward movement in the State of Ohio's general obligation rating (enhanced)FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS-Material declines in fund balance and/or liquidity-Declines in student enrollment-Reduction in resident wealth levels-Downgrade of issuer rating (COPs)-Weakening of the Ohio School District Credit Enhancement Program mechanics (enhanced)LEGAL SECURITYThe district's Series 2021 bonds, is backed by its full faith and credit pledge and authority to levy unlimited ad valorem property taxes for debt service. The district's debt is further secured by interceptable aid from the State of Ohio through the OSDCEP.Debt service on the district's COPs is secured by lease payments subject to annual appropriation by the district board of education.USE OF PROCEEDSProceeds of the 2021 bonds will be used to refund a USDA loan from 2018 that was originally issued to finance the construction of a new, single site district pre-kindergarten - 12th grade campus.Proceeds of the COPs will be used to help finance a new field house and athletic facility for the district.PROFILEBerkshire Local School District is in Geauga County (Aa1), approximately 40 miles east of Cleveland (A1 stable) and 50 miles northeast of Akron. The district provides pre-kindergarten through twelfth grade education to approximately 1,350 students. The district's population is approximately 13,500.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. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.At least one ESG consideration was material to the credit rating action(s) announced and described above.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Katie Anthony Lead Analyst Regional PFG Chicago Moody's Investors Service, Inc. 100 N Riverside Plaza Suite 2220 Chicago 60606 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Adebola Kushimo Additional Contact Regional PFG Dallas JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. 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