Less than two months after voters in the East Meadow School District approved a $49.55 million school bond improvement plan, the largest in the district's history, Moody's Investors Service announced that it has upgraded the school district's long-term bond rating, resulting in taxpayers saving over $1 million in interest expenses that would have been paid over the life of the bond.

The district's bond rating was upgraded to A-1 status, up from its most recent rating of A-2. Moody's applies numeric modifiers of 1, 2, and 3 to bonds, with 1 being the strongest investment.

"In the competitive marketplace, the higher the bond rating, the more secure the bond to the investor, the less interest rate we have to pay on that money," explained Assistant Superintendent for Finance and Administration Leon Campo. "Ultimately, this will translate into much lower interest costs to East Meadow, thereby saving our taxpayers approximately a million dollars."

A report issued by a team of Moody's analysts states, "The A-1 rating reflects the East Meadow School District's strong financial management, growing residential tax base, and manageable debt level." The report continues, "Moody's expects that the school district's trend of sound financial performance will persist, given a history of sizable reserve levels, ongoing revenue growth, and prudent financial management."

The A-1 rating reflects Moody's expectation that district cash flows will prove sufficient to cover bond note repayment. Fiscal 2001 projections show cash margins in excess of what are required for note repayment. The district has historically projected conservative cash flows and the 2000 year-end balance was well above the projected figure. Revenues, including state aid, came in higher than projected, resulting in receipt of the balance of the full tax levy. This helps assure timely repayment of bond notes.

Despite future borrowing for the School Bond Improvement Plan, Moody's expects the district's debt position to remain satisfactory due to aggressive principal repayment and a moderate debt burden.

"Our policy in East Meadow is not to spend everything that we can possibly budget for," said Campo. "When we get into our school year, we have to justify expenditures." He also credited an aggressive investment program, in which idle funds are invested in approved securities, for generating considerable additional revenue for the district.

"At a time when there are almost daily reports concerning Nassau County's precarious financial position, it must give the district great satisfaction to know that East Meadow is on an upward trend that will accrue a benefit to all the residents and taxpayers of the district," said Robert Kerr, a financial advisor with the New York Municipal Advisors Corporation, which specializes in public sector financing.

Voters in the district approved the school bond improvement initiative May 16, 2000. The bond will result in the renovation and replacement of expired building systems vital to the safe and efficient operation of all school buildings, and the reconfiguration, reconstruction, and the construction of additional instructional space at several schools.

"A couple of decades ago, our bond rating was BAA. We have been fortunate over the years to qualify for a number of bond upgrades based on our improving financial condition. The Board of Education should be proud of this recognition; the financial policies it has supported have greatly contributed to this successful outcome," said Campo.

"We were pleased with the community's overwhelming support of our bond initiative and the recognition by Moody's of the district's financial strength," said East Meadow Board of Education President Clement Grieco.

"Our taxpayers will be rewarded with a significant savings from the originally estimated impact of this improvement project," said Superintendent of Schools Dr. Robert Dillon. "It's nice to see that the Board's efforts to provide the best educational environment in a financially sound manner are paying off for everyone."