Adequate budgetary performance due to costs related to rising pension and other postemployment benefits, as wellas subsidy from general fund to trash enterprise fund;
Very strong liquidity providing very strong cash levels to cover both debt service and expenditures;
Very strong management conditions led by formalized financial policies and an experienced and capablemanagement team; and
Very strong debt and contingent liabilities position, mostly reflecting the city's rapid amortization and low debt burden, which is being offset by sizable pension and other postemployment benefits (OPEB) liabilities.
Strong budget flexibility
The city regained local control over its finances on June 30, 2009, and prepared its first budget for the 2011 fiscal year.This occurred after five years of oversight and management by the commonwealth-created Springfield Finance ControlBoard. For fiscal 2013, available general fund reserves closed with a balance of $92 million, equal to 15.5% of expenditures. For the 2014, the city appropriated about $7.3 million of the stabilization reserve to balance its budget. If the drawdown materializes, the fund balance will still remain within the range of 8%-15%.
Adequate budgetary performance
While we believe that long-term budgeting challenges will persist, in our view, Springfield has recently demonstratedthe capacity to execute key reforms to manage near- and long-term fiscal challenges. Budget balancing solutions havelargely centered on the expenditure side as the city has little revenue-raising flexibility. We understand Springfield is atits levy ceiling and, therefore, cannot approach voters for an operating override. Annual staffing reductions since fiscal2008 (through a combination of layoffs and attrition) resulted in a 24% drop in full-time equivalent positions. We believe management's actions to date have been significant and officials report the city is now functioning at its coreservice level. Management also reports it might make further cuts as needed and expects the fund balance to remain ator near current levels, absent new development. Springfield ended with small general fund and total governmentalfunds deficit of 0.2% and 0.8%, respectively, after adjusting for timing-difference in state and federal grants revenuesand expenditures. We believe that the city's sizable OPEB and pension obligations will continue to pressure the city'sfinancial performance. Offsetting the pressure include additional revenues from the local casino development, whichcould potentially add $20 million of recurring revenue in the form of excise tax starting fiscal 2017.
Very strong management conditions
We view the city's management conditions as very strong, with formalized and sustainable financial practicescombined with a capable and experienced management team.
Very strong liquidity
Supporting Springfield's finances is what we consider strong liquidity, with total government available cash at 20% of total governmental fund expenditures and at 380% of debt service. Further enhancing our view of the city's liquidityposition is that Springfield maintains strong access to external liquidity. The city is a regular market participant, havingissued bonds frequently in the past several years, including GO bonds and short-term BANs.
Very strong debt and contingent liability profile
Following this bond issue, Springfield has about $247 million of total direct debt outstanding. Included in thiscalculation is about $14 million of BANs outstanding. Overall, the city's total governmental funds debt service is 5% of total governmental funds expenditures and net direct debt is 22% of total governmental funds revenue, levels we
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Summary: Springfield, Massachusetts; General Obligation; Non-School State Programs; Note