Politics & Government

Standard and Poor's Upgrades Tewksbury's Bond Rating to AA

The rating was officially upgraded from AA- to AA on Thursday, Nov. 21, and the ratings company does not expect to lower the rating over the next two years.


Tewksbury residents have one more thing to be thankful for this week as Standard and Poor's have upgraded the town's bond rating to AA, citing a strong local economy and good financial management practices by town leadership.

The rating was officially upgraded from AA- to AA on Thursday, Nov. 21, and the ratings company does not expect to lower the rating over the next two years.

In a report outlining their decision, Standard and Poor's cite a strong local economy with its projected per capita effective buying income at 123.3 percent of the U.S. and per capita market value of $136,281.

The company also states that Tewksbury's leadership has remained strong in recent years, maintaining good financial practices.

Chairman of the Board of Selectmen Scott Wilson said all the town departments continue to work toward greater financial stability for Tewksbury.

”The Town have been working diligently over the past few years to develop a strong foundation for the Town’s present and future finances and the hard work of the Board of Selectmen, School Committee, Finance Committee and ultimately Town Meeting has proved to be beneficial," Wilson said. 

Standard and Poor's also cites budget flexibility as a reason for Tewksbury's upgrade, with available reserves at $8.95 million or about 9.9 percent of fiscal 2012 expenditures.

Unaudited results for fiscal 2013 show available reserves at $8.2 million or 8.7% of expenditures, according to the ratings service.

Tewksbury's budget performance has also remained strong, according to Standard and Poor's, with a surplus of 4 percent for the general fund and a small deficit of 2 percent in total governmental funds in fiscal 2012, after adjusting for one-time expenditures related to capital outlay, as well as one-time state aid revenues.

"The stable outlook reflects our view of the town's improved financial performance and strong reserves," the report states.

Unaudited results for fiscal 2013 show the town closed with a positive general fund operating performance of $675,000 net of transfers (0.7 percent of budget) and slight deficit of 2.1 percent in total governmental funds.

In addition to strong financial practices, "Tewksbury's debt and contingent liabilities profile is adequate," according to Standard and Poor's. 

Total governmental fund debt service as a percent of total governmental fund expenditures is at 3.1 percent, and with net direct debt as a percent of total governmental fund revenue at 53.4 percent in fiscal 2012.

Standard and Poor's project that debt issuance within the next two years will bring net direct debt, including new issuance of about $4 million in fiscal 2014, to about 66.7 percent of total governmental fund revenue.

The ratings company also addresses Tewksbury's participation in the Middlesex County Retirement Association, which as of July 1, 2012, the latest actuarial valuation date, has a $1.1 billion unfunded liability and is 43.7 percent funded.

Tewksbury's share of the liability is 6.68 percent or $74.5 million.

In fiscal 2013, the annual required contribution was $11.5 million (about 13 percent of general fund expenditures), and the town's payment was $4.8 million or 4.9 percent of expenditures and equivalent to 42 percent of the annual required contribution.

Tewksbury will budget $350,000 per year to the state trust fund starting in fiscal 2014.

"Rising fixed costs associated with the town's long-term liabilities will pressure Tewksbury's budgetary performance in the medium term in our view," the report states. "However, we believe management will make the necessary revenue and expenditure adjustments to maintain its balanced operating results and strong budget flexibility. For these reasons, we do not expect to lower the rating in the next two years."


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