Morris-Union Jointure Commission, NJ — Moody’s upgrades Morris-Union Jointure Commission, NJ’s COPs to Baa1 from Baa3 and assigns A3 issuer rating; outlook stable – Yahoo Finance

Rating Action: Moody’s upgrades Morris-Union Jointure Commission, NJ’s COPs to Baa1 from Baa3 and assigns A3 issuer rating; outlook stableGlobal Credit Research – 16 Mar 2021New York, March 16, 2021 — Moody’s Investors Service has assigned an A3 issuer rating to the Morris-Union Jointure Commission, NJ. The issuer rating reflects the district’s ability to repay debt and debt-like obligations without consideration of any pledge, security, or structural features. Concurrently, Moody’s has upgraded the underlying rating on the district’s certificates of participation (COPs) to Baa1 from Baa3. The outlook is stable. This action concludes a review for possible rating change initiated on January 26, 2021 in conjunction with release of the US K-12 Public School Districts Methodology. The rating affects $27.4 million in debt.RATINGS RATIONALEThe A3 issuer rating reflects the commission’s strong finances and financial flexibility but poor enrollment trends. Management budgets very conservatively and has far greater revenue raising power than is the case for “traditional” K-12 public schools. However, the commission, which supplies educational and related services to students, caters to students with very specialized needs. Enrollment numbers are quite low, with a weakening trend over several years, which introduces outsized risk to the commission’s operations. These risks are balanced by strong finances, modest long-term liabilities and low fixed costs are low, though there is exposure to underfunded state pension plans.We do not see any material immediate credit risks for the commission related to the ongoing pandemic. The district’s revenues come from other districts in the state and have held steady. The district temporarily saw some very modest revenue pressures but these had little impact.The COPs rating was upgraded to Baa1 because it is one notch lower than the issuer rating due to annual appropriation risk and the more essential nature of the pledged asset, school buildings.RATING OUTLOOKThe stable outlook reflects our expectations that despite ongoing enrollment declines, the commission’s finances will remain healthy thanks to conservative budgeting and revenue raising power.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS-Improved enrollment trendsFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS-Declines in fund balance and cash-Continued enrollment declinesLEGAL SECURITYThe COPs are secured by a ground lease on the building and property in Warren Township (Aaa stable). The lease is expected to be repaid from net revenues, including tuition, fees and charges. Lease payments are subject to annual appropriation.PROFILEThe Morris-Union Jointure Commission provides educational services for children diagnosed with severe autism or pervasive developmental delays. The majority of the commission’s students come from Morris County (Aaa stable), Somerset County (Aaa stable), Essex County (Aaa stable), Hunterdon County, and Union County (Aaa stable), New Jersey.METHODOLOGYThe principal methodology used in these 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. Alternatively, please see the Rating Methodologies page on www.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. 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