Syracuse, New York; Appropriations;
General Obligation; Note
Primary Credit Analyst:
Hilary A Sutton, New York (1) 212-438-7093;
Secondary Contact:
Lindsay Wilhelm, New York (1) 212-438-2301;
Table Of Contents
Related Criteria And Research
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Syracuse, New York; Appropriations; General
Obligation; Note
Credit Profile
US$7.052 mil pub improv (serial) bnds ser 2014B
Long Term Rating A/Stable New
US$2.0 mil BANs ser 2014A
Short Term Rating SP-1 New
Syracuse GO
Unenhanced Rating A(SPUR)/Stable Upgraded
Long Term Rating A/Stable Upgraded
Standard & Poor's Ratings Services raised its long-term rating and underlying rating (SPUR) on Syracuse, N.Y.'s
general obligation (GO) bonds to 'A' from 'A-' due to the city's improved, albeit still weak, budgetary flexibility. The city
closed fiscal 2013 with a very strong available balance but remains pressured by its limited ability to raise revenue and
cut expenditures. At the same time, Standard & Poor's raised its rating on the city's appropriation debt to 'A-' from
'BBB+' and assigned an 'A' long-term rating to the city's series 2014B public improvement bonds and an 'SP-1'
short-term rating to the city's series 2014A bond anticipation notes (BANs). The outlook on the long-term rating is
The 2014B bonds and 2014A BANs are general obligations of the city, secured by its faith and credit pledge. Bond
proceeds will finance various maintenance-related projects, while BAN proceeds will finance start-up costs related to
the second phase of financing for the Joint Construction Board school renovation project.
The long-term rating reflects our assessment of the following factors for the city:
• Adequate economy, which benefits from participation in the broad and diverse Syracuse metropolitan statistical
area (MSA) as well as from the presence of stabilizing institutions;
• Adequate liquidity providing adequate cash levels to cover both debt service and expenditures;
• Weak budgetary performance;
• Adequate debt and contingent liabilities position due, in part, to significant pension and other postemployment
benefit (OPEB) costs; and
• Strong management conditions with good policies.
Weak budgetary flexibility
We consider the city's budgetary flexibility weak, with fiscal 2013 reserves (June 30 year-end) totaling $70.2 million, or
31.4% of expenditures, adjusted for routine transfers. This balance is significantly better than 2012 when the city
posted available reserves of $23.7 million (10.8% of expenditures adjusted for routine transfers). The year-over-year
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increase is attributable to a $25 million surplus and the elimination of restricted reserves; in fiscal 2012, the city had
restricted reserves of $24.3 million compared with 2013 when it totaled just $411,000. While the fiscal 2014 budget
included an $18 million reserve appropriation, management reports the use of reserves at year-end is likely to be
closer to $9.4 million due to outperforming revenues and expenditure savings. We believe reserves could drop again in
2015 due to a budget-balancing reserve appropriation and outstanding labor contracts. We further believe the city has
a limited ability to cut spending due to the high level of fixed costs, and a limited capacity to raise revenue due to a
dependence on state aid.
Weak budgetary performance
We view the city's budgetary performance as weak despite the general fund and total governmental funds recording
surpluses in fiscal 2013 of 0.6% and 3.4% of expenditures, respectively. General fund revenue and expenditures were
adjusted for recurring transfers and nonrecurring items, most notably a $20.9 million rollup of state aid. Total
governmental fund revenue was adjusted for the same nonrecurring items and recurring transfers from the enterprise
funds, while total governmental fund expenditures were adjusted for the use of bond proceeds. While there were some
favorable revenue variances in fiscal 2013, the general fund surplus was achieved largely through positive expenditure
variances. Principal revenue sources were federal and state aid (41% of total general fund revenue), sales tax receipts
(31%), and property taxes (15%).
The city reversed a three-year trend of general fund drawdowns in fiscal 2012 by posting surpluses in 2012 and 2013.
Going forward, we believe performance could be pressured despite the city's conservative approach to budgeting and
demonstrated ability to cut gaps. The fiscal 2014 original budget includes an $18 million reserve appropriation, though
management expects the use of reserves to total $9.4 million at year-end, and the 2015 proposed budget includes a
$20.2 million appropriation. The city's three-year general fund forecast identifies gaps of around $20 million annually
through 2018, though officials report these could widen given outstanding labor contracts; the police and firefighters'
unions have been out of contract since 2010 and 2012, respectively.
Adequate economy
We consider the city's economy to be adequate when combining projected per capita income of 65% of the national
level and market value per capita of $31,000. The city is part of the broad and diverse Syracuse MSA and benefits from
the presence of stabilizing institutions, including Syracuse University. While the tax base continues to be largely
stagnant –assessed value has been $3.7 billion since 2010 – we note that about 51% of assessable base is tax-exempt.
Adequate liquidity
The city's liquidity position is adequate, with total government available cash at 14.1% of total governmental fund
expenditures and 223% of total governmental funds debt service. We believe these metrics could weaken given
projected drawdowns. However, we believe the city has strong access to external liquidity, having issued GO bonds
frequently in the past five years. We believe nonremote contingent liabilities exist given that the city is self-insured for
health insurance and does not carry stop-loss coverage.
Adequate debt and contingent liability profile
The debt and contingent liabilities position is adequate. Total governmental fund debt service is 6.3% of total
governmental funds expenditures and net direct debt is 26% of total governmental funds revenue. Amortization is
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Summary: Syracuse, New York; Appropriations; General Obligation; Note
rapid, with more than 70% of principal due to be retired over the next 10 years. The city's six-year capital
improvement plan identifies $33.5 million of additional debt issuance in fiscal 2015 and 2016.
The city and its school district participate in state-run pension plans; contributions were 100% of the requirement in
each of the past three fiscal years. The OPEB liability is $1.8 billion. The pension annual required contribution and
annual OPEB cost amounted to 14.6% of expenditures. Management has indicated it intends to continue making its
full annual pension contributions. In our view, the city does not have a meaningful plan to address its large OPEB
Strong management conditions
We view the city's management conditions as strong with good financial practices.
Strong Institutional Framework
We consider the Institutional Framework score for New York cities strong.
The stable outlook reflects our view of the city's improved financial performance in fiscal 2012 and 2013, which
translated into improved budgetary flexibility. While we believe the city will continue to be challenged by high fixed
costs and limited revenue-raising flexibility, we expect the strong management to continue reducing budget gaps and
maintaining flexibility. We do not expect to revise the rating in the next two years. However, should the city
significantly spend down reserves such that flexibility diminishes, the rating could be lowered. Conversely, a trend of
structurally balanced budgets and results could result in a higher rating.
Related Criteria And Research
Related Criteria
• USPF Criteria: Local Government GO Ratings Methodology And Assumptions, Sept. 12, 2013
• USPF Criteria: Short-Term Debt, June 15, 2007
• USPF Criteria: Appropriation-Backed Obligations, June 13, 2007
• USPF Criteria: Financial Management Assessment, June 27, 2006
• USPF Criteria: Debt Statement Analysis, Aug. 22, 2006
Related Research
S&P Public Finance Local GO Criteria: How We Adjust Data For Analytic Consistency, Sept. 12, 2013
Ratings Detail (As Of June 5, 2014)
Unenhanced Rating A(SPUR)/Stable Upgraded
Syracuse GO (BAM)
Unenhanced Rating A(SPUR)/Stable Upgraded
Syracuse GO
Unenhanced Rating A(SPUR)/Stable Upgraded
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Summary: Syracuse, New York; Appropriations; General Obligation; Note
Ratings Detail (As Of June 5, 2014) (cont.)
Syracuse Indl Dev Agy, New York
Syracuse, New York
Syracuse Indl Dev Agy (Syracuse)
Long Term Rating A-/Stable Upgraded
Many issues are enhanced by bond insurance.
Complete ratings information is available to subscribers of RatingsDirect at All ratings
affected by this rating action can be found on Standard & Poor's public Web site at Use
the Ratings search box located in the left column.
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Summary: Syracuse, New York; Appropriations; General Obligation; Note
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