9.1. SR 01-21-2014 - Laserfiche WebLink

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Criteria I Governments I U.S. Public Finance: U.S. Local Governments General Obligation Ratings:Methodology And Assumptions levels reflect their additional spending power coming from parent financing or student loans. Participation in a broader metropolitan area may bring nonresident spending into a community or provide additional job opportunities for residents beyond its borders--especially when the metropolitan area is economically strong. 44. By contrast,income and TMV per capita may fail to account for additional risks. The impact on income and economic activity from job losses may not immediately show up in income levels and market prices, and such losses are more likely to occur in more cyclical and concentrated tax bases. Because they do not exhibit strong cyclicality, concentration in the education/health,government, and transportation,trade and utilities sectors are not considered for this adjustment. County-level unemployment rates are used to reflect the wider view of the local economy. Population declines may also dampen the impact on per capita measures, and high Dependent Population levels can mean additional service requirements or different levels of willingness to support tax increases. 45. We assess participation in a larger broad and diversified economy at the Metropolitan Statistical Area(MSA)level. When the MSA is deemed to be broad and diverse, a positive adjustment of one point is applied to the initial economic score. The determination is based on an evaluation of three components--employment diversity, employment growth, and the employment base. Each of the three components is scored as strong,moderate, or weak and is equally weighted. Strong and weak scores offset each other,while a moderate score remains neutral. MSAs are considered to be broad and diverse when the net score of the three components is strong, and are not considered broad and diverse when the net score is weak. If the net score is moderate, applying the broad and diverse adjustment to the initial economic score may be warranted if we determine the local government benefits significantly from participation within its respective MSA. 46. Employment diversity within an MSA is primarily assessed using a Herfindahl Index that includes the share of total employment distributed across 12 general employment sectors. For this index,we consider less than 0.15 to be strong, between 0.15 and 0.18 to be moderate, and greater than 0.18 to be weak. Employment growth is primarily measured by the percentage change in total employment within an MSA for the prior five-year period. For this measure,we consider an MSA with a rate better than the sum of all MSAs as strong;if the MSA's rate is worse but within three percentage points of the sum of all MSAs it is considered moderate, and a rate more than three percentage points worse is considered weak. The employment base measures total employment within the MSAs across all sectors. For this measure,we consider population greater than 250,000 to be strong,between 100,000 and 250,000 to be moderate, and less than 100,000 to be weak. 47. Additional considerations include employment concentration within specific sectors if. 1)the Herfindahl index is greater than 0.067, excluding the education/health,government, and transportation,trade, and utilities sectors, or 2) any volatile sector is more than double the level found in the sum of all MSAs and a large 10-year percentage decline in total employment(greater than 10%). If any of these considerations exist,they may reduce the overall score from strong to moderate or moderate to weak. E. Management Score 48. The rigor of a government's financial management practices is an important factor in Standard&Poor's analysis of WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 12,2013 18 1190266 1300881696