OREANDA-NEWS. Fitch Ratings assign 'AAA' ratings to the following state of Florida full faith and credit state refunding bonds:

--\$260.875 million State Board of Education Public Education Capital Outlay (PECO) Refunding Bonds, 2015 series D.

The bonds are expected to sell competitively as soon as April 6, 2015 for bids on 18 hours' notice.

The Rating Outlook is Stable

SECURITY

Florida's full faith and credit bonds are secured first by specific revenues. In this case, a first lien on utility gross receipts taxes deposited into the state public education trust secures the bonds. Florida's full faith and credit are also pledged and provide the basis for the rating.

KEY RATING DRIVERS

SOLID LONG-TERM ECONOMIC PROSPECTS: Long-term economic fundamentals are strong with future growth expected. The pace of economic growth has accelerated and the housing market continues to show signs of improvement.

ECONOMIC AND REVENUE STABILIZATION: Revenue performance has improved along with the economy resulting in greater financial flexibility.

STRONG FINANCIAL MANAGEMENT PRACTICES: The state employs sound financial management practices, including the use of consensus revenue estimating, and has a history of prompt action to maintain fiscal balance and reserves.

SATISFACTORY RESERVES: Reserves remain satisfactory although they are reduced from the peak reached prior to the recession. These reserves offset risks associated with an economically sensitive revenue system vulnerable to declines in the rates of population growth, consumption, and activity in the housing market.

MODERATE LIABILITIES: The state's debt burden is moderate and pensions are adequately funded.

RATING SENSITIVITIES

The rating is sensitive to continued stability in economic and financial performance.

CREDIT PROFILE

The 'AAA' rating on Florida's GO bonds recognizes the state's strong financial management practices, moderate debt burden, adequately-funded pension system, solid long-term economic prospects, and satisfactory reserves.

The economic recovery in Florida continues to accelerate. Having emerged slowly at first from the national recession, the labor market is showing signs of a stronger recovery - employment is up and the unemployment rate down, the housing market is improving, and collections of economically sensitive state revenues are increasing.

Fiscal 2015 revenues year-to-date through February continue to trend slightly above the forecast adopted in December 2014, by \$171.1 million, and have increased \$930 million (5.7%) on a year-over-year basis. Strong performance in sales tax collections is offsetting slightly weaker real estate and insurance premium taxes. The adopted budget for fiscal 2015 increased overall spending 3.8% to \$77 billion and the general revenue budget 5.0% to \$27.9 billion. The governor's proposed budget for fiscal 2016 reflects the improved revenue environment and would reduce taxes, including \$640 million from the General Revenue Fund. Each house of the state legislature has passed a version of a fiscal 2016 budget, with the Senate version including Medicaid expansion under the Affordable Care Act. The enacted budget will be negotiated in conference committee and sent to the Governor.

Florida's full faith and credit bonds are secured first by specific revenues. PECO bonds, which are the state's primary method to fund school construction, are secured first by a first lien on utility gross receipt taxes. The bonds are ultimately backed by Florida's full faith and credit pledge. The current offering is a refunding for debt service savings.