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Criteria I Governments I U.S. Public Finance: U.S. Local Governments General Obligation Ratings:Methodology <br /> And Assumptions <br /> that government's creditworthiness. Managerial decisions,policies, and practices apply directly to the government's <br /> financial position and operations, debt burden,and other key credit factors.A government's ability to implement <br /> timely and sound financial and operational decisions in response to economic and fiscal demands is a primary <br /> determinant of near-term changes in credit quality. The management score assesses the impact of management <br /> conditions on the likelihood of repayment. The score does not measure individual managerial quality, organizational <br /> efficiency, or any other performance indicator associated with management. Table 9 summarizes the scoring for the <br /> management score. <br /> 49. The Financial Management Assessment(FMA)methodology(see "Financial Management Assessment",published <br /> June 27, 2006)used in U.S.public finance forms the starting point for the management score.The FMA assesses only <br /> the policies and practices of a local government. Our criteria recognize the mere development of such practices as a <br /> principal method for preventing default as early as the 1930s evidenced in Hillhouse. <br /> Table 9 <br /> Assessing The Management paragraphs <br /> Sere Characteristics <br /> 1 (verystrong) FhlAscore of'Strong` and none ofthe factors in scores'4'or <br /> '5'are present. <br /> 2(strong) FNIAscore of'Good'and none ofthe factors in scores'4'or <br /> '5'are present. <br /> 5(adequate) FNIA score of'Standard' and none ofthe factors in scares'4' <br /> or'5'are present. <br /> 4(veak) FtlAscore of'Vulnerable'or any ofthe fc %%ing is present: <br /> there is a financial reporting restatement that has a material <br /> negative impact; arry ofthe conditions in score's'existed <br /> within the pastthreeyears;the structural imbalance override <br /> condition exists orexisted vithin the past three years; or a <br /> vary high debt, pension, and OPEB burden. <br /> 5(very vreak) Regard!essof the FtlAscore, any of thefollo%ling is present: <br /> a management team that lacks relevant skills resulting in a <br /> weak capacity for planning, monitoring, and management; an <br /> auditor has delivered a going concern opinion,the <br /> government is exhibiting an un%illingness to support a debt or <br /> capital lease obligation; or the governmeflt is actively <br /> considering bankru t rinthenearterm. <br /> Qualitative factors with a positive impact on the Qualitative factors vith a negative impact on the initial <br /> initial score score <br /> Consistent abilityto maintain balanced operations. Frequent management tumover inhibiting a current <br /> understanding ofthe government's financial position and its <br /> abilityto adjust, or political gridlock, or instabilitythat brings <br /> th a sa m e resu Its. <br /> Govemment service levels are limited. Consistent inabilityto execute approved structural reforms for <br /> t%%o con secutive yes rs. <br /> Foreach relevant qualitative factor,the scare changes byone point.The final management scareequalsthe initial <br /> scare adjusted up ordowi based on the net effect ofthe qualitative adjustments. ā¯‘ualitative adjustments cannot <br /> improve an initial management scare of'5'or, in certain cases, a scareof'4 (see paragraph 557 . <br /> WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 12,2013 19 <br /> 1190266 1300881696 <br />