Tolland Gets Top Rating from S&P

Tolland has received a huge boost from a major financial ratings organization.
 
Standard & Poor's on Monday released a report indicating that Tolland's AA rating on the town's general obligation debt went up two notches to AAA from AA.
 
The outlook for Tolland is stable, the S&P report indicated. 

"Since I came to Tolland some eight years ago, we have been working diligently to enhance our financial structure as well as improve our fund balance so as to improve our bond rating from financial rating institutions," Town Manager Steven Werbner said. 

AAA is S&P's top rating. 

"There are maybe a dozen towns in Connecticut with such a designation and we are in the good company of towns like Glastonbury, West Hartford, Greenwich, Ridgefield, etc. - towns that, for the most part, have much greater economic diversity while we rely heavily on our internal finance polices, management and fund balance to demonstrate our credit worthiness," Werbner said. "The achievement of this designation will result in lower borrowing costs in the future and is a true testament to the town's strong financial position and its ability to properly manage the Towns finances."

The S&P report offers the following summary: 

• Tolland's local economy is very strong, with market value at roughly $121,422 per capita and projected per-capita effective buying income at 150 percent of the national level. Residents benefit from Tolland's participation in the broad and diverse Hartford-West Hartford-East Hartford metropolitan area. Hartford County unemployment was 6.6 percent in 2012.

• Tolland's budgetary flexibility remains strong with available reserves at 14 percent of operating expenditures in fiscal 2012. Tolland estimates reserves will narrow a bit but remain above 11 percent in fiscal 2013. The town's policy is to maintain an unassigned fund balance between 8 percent and 15 percent of expenditures, a level it has historically adhered to. 

• S&P views budgetary performance as adequate with a general fund surplus of 0.2 percent and a slight 1.1 percent deficit for the total governmental funds in fiscal 2012. Tolland estimates it will end fiscal 2013 with a slight general fund balance decline of roughly 0.6 percent due to its funding a bit more pay-as-you-go capital from the general fund. Nevertheless, the town's revenue profile is very stable. Property taxes comprise 68 percent of revenues. State aid accounts for 30 percent.

• What S&P considers very strong liquidity supports Tolland's finances with a total governmental-to-available cash ratio of 25.8 percent of total governmental fund expenditures and a debt service ratio of roughly 316 percent. S&P believes Tolland has strong access to external liquidity.

• S&P views Tolland's management conditions as very strong with "strong" financial management practices under its Financial Management Assessment methodology. S&P believes Tolland's financial policies are strong, well embedded and likely sustainable.

• Tolland's debt and contingent liabilities profile is strong with a total governmental funds-to-debt service ratio of 8.2 percent of total governmental funds expenditures and a net direct debt ratio of 58.3 percent  of total governmental funds revenue. Overall net debt is 1.9 percent of market value, and officials plan to retire approximately 85 percent of debt over 10 years.

• Tolland's pension plan is a defined-contribution plan, which limits the town's pension liabilities. It is current on all of its pension contributions. Teachers' pensions are paid by the state. The town's unfunded other postemployment benefit liability has been actuarially valued at $5.1 million as of July 1, 2010, for which the town has established a trust fund and is funding 100 percent of the annual required contribution. OPEB costs amount to 0.8 percent of expenditures.

• S&P considers the institutional framework of municipalities in Connecticut as very strong.