On March 17, 2014, Standard & Poor’s Rating Service assigned its ‘AA+’ rating to the Town of Auburn for $11,040,000 of General Obligation (Refunding Bonds), and assigned a ‘SP-1+’ short-term rating to the $10,000,000 of town’s bond anticipation notes (BANS) to be issued on April 1, 2014.
The ‘AA+’ rating, which is one step from the highest rating of ‘AAA’ that a municipality can receive, is reflective of the Town’s recent adoption and implementation of strong management practices and key financial policies, including long range financial forecasting of both revenue and expense for operational and capital budgets. Other noted factors that contributed to the high rating is multi-year trend regarding budgetary performance, budget flexibility by increasing unused levy capacity, addressing and maintaining an annual OPEB contribution of $500,000, increasing stabilization, increasing reserves, and increasing free cash and undesignated fund balance.
Standard & Poor’s recognizes that town management has formally put into place well embedded policies and practices that should translate into maintaining long-term balanced operations and financial stability. Specifically, Standard & Poor’s noted the Town’s “very strong liquidity”, “very strong economy,” “very strong budget flexibility”, “strong budgetary performance”, “strong management conditions”, “strong debt and contingent liabilities”, and “good financial policies and practices that are embedded and sustainable”.
“We are very pleased with the excellent rating of ‘AA+’ received by Standard & Poor’s which reflects our commitment to maintaining the town’s fiscal health through conservative budgeting, implementation of financial policies, key reforms and operational efficiencies”, states Town Manager Julie A. Jacobson. “This is a true team effort which includes all department heads, the Board of Selectmen, the Finance Committee and Town Meeting who have supported management’s financial recommendations”.
The Town sought a rating from Standard & Poor’s this year in order to have a fresh perspective from analysts based on the changes town administration has made since the Charter was amended in 2009 and the reorganization was implemented in 2011. Auburn has strengthened its financial policies, implemented major cost saving reforms, implemented new management practices, and undergone operational restructuring. Moody’s Investor Service has historically been the only rating agency to rate the town.
The Town was also rated by Moody’s Investors Service and was assigned and maintained a strong rating of Aa3. By comparison, Standard & Poor’s rating is two-rating categories higher than the current Moody’s rating. The higher bond rating translates to lower interest costs for financing public projects and town capital, thus lower costs to Auburn taxpayers.
“The Town Manager and the entire Financial Management Team should be commended for this historic rating”, said Chief Financial Officer, Edward Kazanovicz. “This rating speaks volumes about management’s unwavering commitment and accomplishments in improving the town’s financial strength and stability.”