The Montgomery County Board of Education heard a fiscal presentation Jan. 14 outlining the district's November 2024 financial position and an unexpected credit-rating upgrade from S&P Global.

Interim finance staff said year-to-date revenues as of November totaled about $39.6 million and year-to-date expenditures about $45.9 million, figures the presenter described as approximately 16% of the annual budget. The district reported a general fund balance of roughly $86.4 million, though staff noted portions of that balance are restricted by designated funding sources such as transportation and turnaround grants.

The presentation emphasized that about $73.5 million of the general fund balance is discretionary after accounting for restricted funds. "A couple of weeks ago ... the district participated in the S&P Global rating review," interim finance presenter Pamela Watkins told the board. Watkins said the district's rating had risen from a prior BBB+ level to A+ and the outlook moved to stable.

Chris Williams of Rice Advisory, the district's municipal adviser, described the review process and the outcome to the board. "I am proud to tell you that we have upgraded the board 3 notches from triple B plus to A plus," Williams said, adding that the upgrade should lower borrowing costs and broaden investor interest in the district's bonds.

Board members asked follow-up questions about year-to-year differences in beginning fund balances and the drivers behind the financial variances. Watkins told the board the primary variance from the prior year was the beginning fund balance, not current-year revenue or expenditure changes. One board member asked whether recent salary increases accounted for differences in payroll spending; Watkins replied that payroll remains about 70% of general fund expenditures and that she would provide more detailed breakdowns if requested.

Why it matters: A higher credit rating can reduce the district's long-term borrowing costs, potentially lowering interest expense on bonds used for capital projects. Board members noted the upgrade as an important development for the district's fiscal capacity.

What's next: Staff said they would provide further breakdowns of payroll and fund-balance changes on request and continue routine financial reporting at future meetings.