Moody’s Upgrades Sag Harbor

Moody’s Investors Service, which evaluates municipalities, schools, businesses, and other entities on their ability to repay short-term debt, announced last week it had upgraded the Sag Harbor School District’s credit rating.

Moody’s upped Sag Harbor to Aa2 from its previous grade of Aa3. The Aa2 rating is just two notches below the best possible rating Moody’s offers. In a news release, Moody’s said Sag Harbor’s new rating “reflects the district’s continued practice of conservative fiscal management” and “incorporates the district’s sizable and wealthy tax base, modest debt burden, and manageable pension liability.”

Katy Graves, Sag Harbor’s superintendent, said the upgrade would benefit taxpayers because a high credit rating allows the district to borrow money at lower interest rates. The district borrows money every year in the form of a tax anticipation note, or TAN, to finance operations until the revenue from property taxes comes in. Sag Harbor is also in the process of issuing $9 million in bonds to fund a capital project, approved by voters in 2013, that includes installing a turf athletic field and improvements to Pierson Middle and High School’s cafeteria, auditorium, and basement, among other projects.

“When we go out for a bond or for a TAN, it’s costing us less as a district to utilize those moneys,” Ms. Graves said. “We’ll pay less in interest for those as a district. That’s really good news.”

The upgrade from Moody’s is the second time in the last three years that Sag Harbor’s bond credit rating has gone up. Ms. Graves said the district voluntarily took Moody’s up on an evaluation, and it paid off.

“It was a brave move to go out there and do that to assess where we are, but it saves the district so much money,” she said. “Now, funds that would have gone into the budgeting process as interest have been reduced significantly. . . . These small captures are so important for the long run because over and over again, it comes back to you.”