In Response to:
Dear sir,
The story about Templeton’s recent bond rating from Moody’s had several factual errors. The story posted this:
“An A1 rating, as opposed to lower ratings, does not require bond insurance, saving the town money. The A1 rating also has a lower interest rate than say an AA rating, or BAA rating.”
In fact, an AA rating is higher than an A1 rating, and an AA would result in lower interest costs than an A1 rating.
The prime reason for the rating is due to the ability to pay these obligations with Prop 2 ½ overrides. It is not due to better money management, rather it is due to the voters approving a Prop 2 ½ debt exclusion.
An excerpt from that rating: “The A1 rating incorporates a small but growing tax base, vastly improved financial position from just a few years ago, elevated debt burden, and above average pension liabilities.”
Templeton’s finances are under stress because we have, to quote Moody’s Investor Services, “…elevated debt burden, and above average pension liabilities.”
This statement is also incorrect:
“After the audits, making some recommended changes and working to improve its financial state, the town received a perfect bond rating from Moody’s Investor Services for the upcoming bond issue of $12.25 million, which will pay for the new elementary school and work on the police station.”
Templeton was issued a rating of A1. AA and AAA are both above that rating. A2, A3, BAA, BBA etc are below that rating. Within each rating, numerals are added to the fundamental rating to discern between the various ratings. For example, A2 is worse than A1, while AA3 is better than A1 but worse than AA2. So the use of the term “perfect bond rating” is not appropriate in this context, as there are higher bond ratings than Templeton was given.
As you can see, Aa and Aaa are higher than A. A1 is below Aa3 grade.
While the bond rating is good news for Templeton, the Town still faces serious financial issues. This bond rating simply reflects that the debt for the new elementary school and for the new police station are exempt from Prop 2 ½ . You can find that rationale contained within the Moody’s report, which I have linked above.
Sincerely,
Mark Barrieau
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Templeton gets first bond rating since 2012
Posted Feb 5, 2019 at 8:48 PM
Updated Feb 6, 2019 at 2:14 PM
TEMPLETON — The town has its first official bond rating since 2012, getting an A1 rating.
The
town hadn’t had a bond rating for about six years since the finances of
Templeton were in a scramble, causing the town to do an audit for the
past two or three years to put its books back in order. After the
audits, making some recommended changes and working to improve its
financial state, the town received a bond rating from Moody’s Investor
Services for the upcoming bond issue of $12.25 million, which will pay
for the new elementary school and work on the police station.
“It’s
astonishing that with the great teamwork that’s been going on in
financial team, (Town Administrator) Carter (Terenzini) and the
selectmen, we got such a good rating,” Board of Selectmen Chairman John
Caplis said. “You figure they haven’t had a bond rating since 2012, even
then it wasn’t as good, not having one for seven years and coming with a
single-A rating is amazing. It will move the community forward.”
Bond
ratings allow a town to borrow for long-term for projects. For the past
six years, the town has been funding large projects through short-term
borrowing to keep the projects moving. Short-term borrowing tends to be
more expensive in the long run with the interest.
An A1 rating, as
opposed to lower ratings, does not require bond insurance, saving the
town money. The A1 rating also has a lower interest rate than say a BAA
rating.
“This is one more positive step. The town has been engaged
for the past three years, it’s a credit to all of the staff and the
financial team in particular,” Terenzini said. “With selectmen’s
support, drive and action on a number of policies that were put in place
to help continue the progress, it’s nice for the town after such a
lengthy period and the rating was more the subject of negative news than
positive news.”
The town got its good bond rating in part because
of the effort the town put into organizing its finances, which Moody’s
and the state takes into consideration when assessing a town.
While
Advisory Committee Chairman Jeff Bennett notes that the A1 rating is a
good sign for the town, he said Templeton has not cured all of its
financial woes just yet.
“It won’t help or fix looming increase in budget for (Narragansett
Regional School District), and I haven’t seen numbers for Monty Tech but
I assume they will go up,” Bennett said. “It doesn’t address funding
issues, that in the past several years we have had to use free cash or
unassigned town money to supplement the previous year’s budget.”
Bennett notes that the bond rating is positive, but is not a fix to
some of the most troublesome financial concerns the Advisory Committee
has.
“Financial transfers are down and the reserve fund doesn’t
have as much money as it did,” Bennett said. “Hopefully this year we
won’t have any unpaid bills we have to deal with at a special town
meeting in the fall sometime which would be another good sign. ... Some
of it is out of our control, like how the state doesn’t fund Chapter 90
(road repair) funds like they used to.”
Bennett is concerned over
funding road repairs, which the town greatly needs, while also having
enough money to cover the growing budgets of the two school districts
students go to, Narragansett and Monty Tech.
Still, town officials believe this bond rating is a step in the right direction.
“I
can’t even express words on how much work has gone in the last two
years in order to achieve where we are today, working with the
Department of Revenue, with audit companies and hand in hand with
current financial team,” Caplis said.
Once again we are over extended. Instead of making this Town government more efficient this Board of Selectman and Town Administrator have dug the financial hole it is in even deeper. We have roads people can barely drive down. Our Highway Department has been abused to the point it barely functions. Our Town Hall has a finance department with more people than ever before in the history of the town, but cannot manage to process time cards correctly, as a result you the taxpayer are paying more to hire a company to process them. But changes have to be made, and made fast. The future is not looking good from where I stand. As a taxpayer, you will pay more and more for less, than ever before. The Town Administrator will have a hard time to spin anything positive out of the mess he has made. It is no wonder he has been thrown out of every town he has worked in !
ReplyDeleteWelcome to the new world. Templeton taxpayers are looking at a $2.75 this year at a minimum with another $1.00 to $1.25 by next year before even thinking about roads.
ReplyDelete$21.00 per $1000 is were we sit right now, just without the bill in hand. Want your roads upgraded add another $1.00. Want pay raises add more money.
This means the "average" tax bill in Templeton will be around $4500 or around an $800 increase per average household in Templeton.
Even though we had an override in 2013 and an override in 2018 for the schools our greatest Selectman is quoted as saying........Since I have been in town all the school has done is cut,” Selectwoman Diane Haley-Brooks said. “They need what they are asking for no doubt, but at the end of the day it will come down on the taxpayers.”
This is partially the reason Templeton is in this Jam. Misinformation being spread by incompetent Selectman.