S&P Global Ratings has assigned the City of Morgan Hill an issuer credit rating of AAA, the highest possible credit rating from S&P, with a stable outlook, says a press release from the City of Morgan Hill. S&P’s AAA rating reflects its favorable view of several factors, including Morgan Hill’s location in Silicon Valley, the city’s “robust” financial reserves, low debt amount with no additional debt plans and “strong management policies and practices, including robust long-term planning and reporting practices, and adequate institutional framework.”
Some of the highlights noted by S&P of the city’s strong financial management policies and practices, according to the city, include:
– A well-defined methodology to forecast revenues and expenditures for its operating funds, including analyses of historical trends and labor agreements and a study of macroeconomic factors
– Management presents a budget-to-actual comparison to the city council monthly, combined with the city’s budget adjustments in cases of material deviations
– Annually updated five-year financial forecasts for its main operating funds to support informed long-term planning and decision-making
– Well-defined investment policy with the primary objectives of safety and liquidity and monthly reporting to the city council on performance and holdings
– Debt management policy that includes specific ratio constraints, including a restriction on debt service as a percentage of budgeted general fund revenue
– Formal minimum reserve policy for its operating funds, including 15% of revenues for the general fund, with a long-term goal of 25% and a requirement that the city take action within 30 days if projections suggest that it will fall out of compliance with the minimum and one year if below the 25% goal.
“S&P’s ‘AAA’ rating reaffirms the city’s sound fiscal management policies and budgetary practices,” said City of Morgan Hill Finance Director Dat Nguyen. “Morgan Hill is proud to receive recognition for its commitment to financial sustainability and is a validation of the city council’s leadership and guidance.”
