S&P: Simcoe County District School Board 'A+' Ratings Affirmed On Continued Strong Provincial Support; Outlook Stable
We have equalized the ratings on the board with those on the Province of Ontario, reflecting our view of an almost certain likelihood of the school board receiving extraordinary government support in an event of financial distress. The ratings on the SCDSB rely on our methodologies for rating government-related entities (GREs).
"Following our GRE criteria, the SCDSB's almost certain likelihood of receiving extraordinary government support reflects our assessment of the board's critical role in providing elementary and secondary education in the County of Simcoe, and its integral link with the province, as seen in the government's level of oversight and centralized decision-making and funding processes," said S&P Global Ratings credit analyst Dina Shillis.
In our opinion, the SCDSB plays a critical role in providing elementary and secondary education in the County of Simcoe. With more than 50,800 full-time equivalent (FTE) pupils, we believe the board provides a critical public service that private schools could not replace should it cease to operate. In addition, we believe a SCDSB default would significantly undermine the government's ability to meet its key political objectives.
Our view of the board having an integral link with Ontario reflects the province's overall accountability framework that ensures the SCDSB complies with provincial standards and legislation associated with funding for education. The Ministry of Education's oversight entails continuous monitoring of school boards' grant claims to ensure they comply with regulations. Furthermore, it plays a critical role in school board funding decision-making and has the power to withhold any grants if the school board fails to comply. The level of provincial support and oversight is centralized and highly regulated.
The stable outlook reflects that on Ontario, as per our criteria. We expect that, within our two-year outlook horizon, the board's role and link will not change, and that the government will continue to provide adequate and timely annual financial support grants to the board to service its debt obligations and to fund its operating and capital activities. We also expect that the SCDSB will continue to comply with the regulations and standards associated with the allocation of government grants.
We could take a negative rating action on the board if we lower the ratings on the province or revise the outlook on Ontario to negative. In addition, although unlikely in the next two years, we could lower our assessment of government support if the government decided to change its policy, leading to decentralization of school boards or profound revisions in funding. This could cause us to revise our view of the SCDSB's link with the province and assign a stand-alone credit profile, potentially leading to a downgrade.
An upgrade or a positive outlook on the ratings of Ontario during our two-year outlook horizon could result in an equivalent action to the ratings on the board.