LONDONDERRY — School district Business Administrator Peter Curro on Tuesday shared the district’s recent bond ratings and discussed how the school system might save thousands of dollars in potential interest costs.

This week, district officials announced that Moody’s had affirmed an Aa2 rating on Londonderry’s general obligation bond, affecting $19.8 million in parity debt obligations.

“The bond rating is a symbol of how strong the financial system in the district is,” Curro said during Tuesday’s School Board meeting.

The Aa2 rating reflects the district’s very limited, albeit stable and recently increased, reserve levels, which are partially mitigated by additional reserves outside of the district’s general fund and Moody’s expectation that the district would be able to successfully increase the tax rate through voter approval if needed.

The Aa2 rating also incorporates the district’s large, wealthy and stable tax base of $3.1 billion, low debt profile and strong management.

State law requires all school districts to appropriate year-end fund balances to reduce taxes in the subsequent fiscal year.

Despite this restriction, the district has increased reserves over the last two years to $648,000, or 1 percent of revenues, in fiscal year 2011 from a low of $356,000, or 0.6 percent of revenues, in fiscal year 2009.

“So let’s say at budget time, we have a warrant article asking for a designation of the fund balance,” Superintendent Nathan Greenberg asked the board. “What would that mean then?”

Curro said such a warrant article wouldn’t be written with a specific dollar amount in mind, but rather would ask voters to place any surplus funds aside for the sole purpose of tackling bond debt.

Greenberg said a positive outcome on such a warrant article would allow the district to be better prepared in the instance of unforeseen expenses, such as an unusual amount of enrollments of special needs students requiring out-of-district placements or a burst water line.

“If we had the permission of the taxpayers, it would be nice for the board to be put in this position,” School Board member Steve Young noted. “If I was the president of a multi-million dollar company…I would like to know I can fulfill all my orders with a cash balance. And there are a lot of things that can happen in our business of educating children.”

Discussions on the topic will continue later this year, when discussions on next year’s district budget are under way.

The district’s budget for fiscal year 2013 budget increased 0.77 percent relative to the prior year’s budget to $64.9 million and includes a $600,000 transfer to the Maintenance Trust Fund, along with a staff reduction of approximately eight positions.

Fiscal year 2013 began July 1.

Moody’s believes that the district’s reserves will remain stable given management’s historically conservative budgeting practices and the district’s ability to raise tax revenues. Future rating reviews will incorporate the district’s ability to maintain or increase reserves levels, despite state restrictions, Curro said.

- - - - - - - -

April Guilmet may be reached at AGuilmet@newstote.com.