Fitch, one of the lead bond rating companies, has downgraded Imperial Community College District’s bond rating from A to A-, but it has also adjusted the outlook from negative to stable, according to a press release issued Wednesday. The bond rating deals specifically with bonds taken out in 2004.
While the downgrade isn’t good news, the fact that Fitch has upgraded the outlook from negative to stable is a good thing, said John Lau, vice president of business services. This has come because while the college has budget problems, it is forming a strategy to address them.
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Through the past few years the college has been dipping into its reserves to educate more students than what the state was funding for. Those expenses, though, are having to be cut to match revenues coming in, Lau said.
The district has three types of debt: short-term loans to deal with deferred state funds, bonds secured by property taxes like Measure J and L, and certificates of participation, which are paid out of general fund money. The bond rating released this week was for the latter of the three, and dealt with a bond to buy equipment.
The money has already been spent, and the bond rating agency comes back every year to assess the situation, Lau said. It’s kind of like a report card for the college’s finances.
The only way it would have an impact is if the college were to try to get another bond, but there are no plans to do that now, he said. This report just reinforces that the college is having fiscal problems.
The downgrade is part of the ongoing fiscal situation that the college is addressing, said college spokesman Bill Gay. It speaks to the continuing fiscal crisis both statewide and locally.
The board will be informed about the situation, and officials are going to work to do everything they can to make sure the bond rating doesn’t go any lower, he said.
Staff Writer Elizabeth Varin can be reached at firstname.lastname@example.org or 760-337-3441.