Town Manager Andrew P. Flanagan has announced that S&P Global has reaffirmed the Town’s 'AAA' rating, the highest rating given to municipalities.
“This is an important validation of the organization’s continuing efforts to provide first class service to residents while protecting the future of the community through responsible financial management. The rating allows us to borrow at the lowest available interest rates and also demonstrates confidence by outside experts in our fiscal practices and structure,” said Flanagan.
According to Standard and Poor’s, Andover’s long-term rating is supported by the following factors:
- A very strong economy strengthened by access to a broad and diverse metropolitan area;
- Very strong management, with strong financial policies and practices under our Financial Management Assessment (FMA) methodology;
- Strong budgetary performance, with an operating surplus in the general fund and a slight operating surplus at the total governmental fund level in FY2017;
- Strong budgetary flexibility, with an available fund balance in FY2017 of 10.9% of operating expenditures;
- Very strong liquidity, with total government available cash equal to 20.1% of total governmental fund expenditures and 4x governmental debt service, as well as access to external liquidity;
- A strong debt and contingent liability position, with debt service carrying charges at 5% of expenditures and net direct debt that is 51% of total governmental fund revenue, as well as low overall net debt at less than 3% of market value and rapid amortization, with 71.6% of debt scheduled to be retired in 10 years
With regard to the Town’s unfunded liabilities, S&P states that the growing cost of pension and OPEB are a long-term concern but that management has made adjustments to employee benefits within the collective bargaining negotiations, providing cost savings and redirecting those savings into the trust. The report states that management’s continued commitment to this funding plan will further enhance the Town's pension and OPEB profile.
“This analysis reaffirms the importance of our ongoing efforts to reduce our unfunded liabilities by identifying new funding mechanisms and through changes achieved through collective bargaining. I am pleased this effort has been recognized by S&P,” added Flanagan.