Moody's Upgrades Cambridge-Isanti Schools, ISD 911

With a focus on strong fiscal management, Moody’s Investment Services has upgraded Cambridge-Isanti Schools credit profile and issuer rating to Aa3. This is good news for the school district. Just as consumers want to achieve a good credit score, the school district and its taxpayers benefit from strengthening its credit rating.

Conservative financial practices, rebounding from deficit spending, and growing enrollment were reasons cited for the change. “The district's fund balance and cash have increased to solid levels from what had been a narrow position, supported by expenditure controls and an influx of federal aid,” Moody’s credit profile stated. It went on to emphasize the importance of maintaining a fund balance and acknowledged voter support of the 2021 operating referendum as contributing to the positive outlook. “Reserves will likely remain strong going forward because of the recent voter approval for a new operating levy.”

This is the second nod of approval from the rating agency in two years. In 2022, Moody’s removed a negative outlook citing prudent fiscal management, improved fund balance, and growing enrollment.

“In the credit opinion, Moody’s was very clear,” said Superintendent Nate Rudolph. “Factors that influenced the upgrade include maintaining a responsible fund balance and growing enrollment. Factors that would influence a downgrade include weakening enrollment or a decrease in fund balance and liquidity. Our Board and leadership team are committed to continuing to exercise conservative budgeting practices to improve our rating for the long-term health of the District. We also want to thank our voters and economic development teams in our communities. Strong schools have strong communities. It’s a partnership. We are stronger together.”

School finance is often unpredictable because revenue is mostly controlled by the state legislature every two years. Moody’s noted a credit challenge for the district is “High dependence on state aid, which has been growing slow relative to inflation.” This year district officials are closely watching both education funding discussions in the legislature and the threat of expensive new mandates that could increase costs. 

“The district is well positioned heading into fiscal 2024 given the new operating levy,” stated Moody’s profile. “But its financial performance will also be heavily influenced by three additional variables: the amount state aid increases under the state's next biennium budget, the rate of salary growth and enrollment. Like other Minnesota (Aaa stable) school districts, state aid makes up the majority of operating revenue for Cambridge-Isanti School District at over two-thirds of revenue. The state biennium budget increased per pupil funding relatively

modestly at 2.45% in fiscal 2022 and 2% in fiscal 2023.” Both increases were less than inflation, which has hovered around 6% in both years.