Standard & Poors has upgraded Trumbull's management assessment from "stable" to "good."
Matthew Spoerndle, managing director of Phoenix Advisors and Trumbull’s financial advisor, made the announcement Monday.
"Town officials here are touting positive results from Thursday’s $11.6 million bond sale and an accompany $9.52 million sale of bond anticipation notes (BANs), both of which yielded competitive interest rates on the strength of solid reviews from all three Wall Street rating agencies," Spoerndle said.
“The successful sale was a direct result of the town’s strong credit ratings,” Spoerndle said. “In a volatile economic environment, ratings becoming increasingly important. Clearly the agencies have recognized the work town officials have done in recent years to improve Trumbull’s fiscal health.”
First Selectman Tim Herbst said, "Efforts over the last four years to improve the pension fund are the primary reason why the management assessment from S&P was elevated." The town has met its actuarial recommended contributions (ARC) for its pension plans and is putting new employees on 401Ks instead of pension plans.
Herbst said he opted out of a town pension plan.
Herbst was pleased with the news. “This independent assessment by the financial rating agencies is proof positive that our financial position is stronger today than it was four years ago," he said.
“Our stable tax rate, consistent growth in our tax base, coupled with our superior school system has strengthened the Town’s financial position,” he said.
Town Treasurer John Ponzio noted that “Trumbull’s outstanding bond rating was confirmed by the three Wall Street rating agencies, which allowed the town to sell $11.6 million of long-term bonds and $9.5 million of short term notes.
"These ratings are important to the Town, as they keep the interest cost on our debt as low as possible, thus reducing taxes needed to pay for the Trumbull High School renovation, various sewer projects and town and Board of Education capital projects," Ponzio said. “In these difficult economic times, where communities all over the country are facing a debt crisis, Standard & Poor’s upgraded its rating of Trumbull’s management."
“We take great pride in receiving these ratings from the financial world and know that they help keep taxes down,” the treasurer concluded.
Bond Ratings Maintained
S&P reaffirmed Trumbull’s rating at AA/Stable; Moody’s at Aa2, and Fitch at AA+, Spoerndle noted.
Spoerndle added that "despite the name, pension contributions based on the ARC are recommended but cannot be mandated by law.
"Instead, in recent years Wall Street rating agencies have been cracking down on public entities that shortchange pension plans to avoid difficult short-term financial decisions. Failure to fully fund pension plans, or work with bargaining units to reduce taxpayer obligations, have led to some well-publicized financial calamities, such as the recent bankruptcy declaration by the City of Detroit."
The advisor said Fitch’s report noted that Trumbull not only made a full pension payment this year to its Town Plan, but also laid the groundwork for smaller taxpayer obligations in the future.
“In addition to increased contributions, management has been successful in moving certain employees into a newly adopted defined contribution plan and is negotiating with other employee groups to require new hires to be part of that new plan,” the report said.