OREANDA-NEWS. S&P Global Ratings revised the outlook on its 'BBB+' rating on Stephens County Educational Facilities Authority (EFA), Okla.'s educational facilities lease revenue debt, supported by Stephens County Independent School District No. 34 (Central High Public School), to stable from negative.

The rating service also affirmed its 'BBB+' rating on the debt.

The outlook revision reflects S&P Global Ratings' opinion of the district's recent budgetary adjustments for fiscal 2017 that should offset potential state funding cuts, coupled with the maintenance of adequate reserves despite challenges regarding state aid funding.

"We believe it is unlikely we will change the rating during the next two years since the district should be able to sustain reserves near current levels, on a modified cash basis, coupled with management continuing to work on expenditure controls to mitigate potential state funding cuts, as well as recent enrollment decreases," said S&P Global Ratings credit analyst Stephen Doyle. "If all other credit metrics remain stable, however, we could raise the rating if finances were to improve significantly, more in-line with the district's higher-rated peers, coupled with management maintaining these improved levels. We could lower the rating if finances were to deteriorate below current estimates, which could result in reduced budgetary flexibility during a period of potential state aid revenue uncertainty."

The outlook reflects S&P Global Ratings' expectation that the district's overall debt will likely remain low and that the local tax base will likely remain stable or increase over the next two years.

An annual appropriation of lawfully available revenue from the district's general or building funds that is sufficient to make lease-rental payments secures the bonds. The district issues general obligation (GO) bonds annually and uses the proceeds to make required rental payments to the authority. However, the district does not pledge the proceeds of those future GO issues as security for the lease revenue bonds. Furthermore, the district's ability to make lease-purchase payments from the proceeds of GO bonds deposited into the bond fund is contingent on the issuance of the bonds.