Michigan Finance Authority Detroit Service Learning Academy; Charter Schools

S&P Global Ratings affirmed its 'B' long-term rating on Michigan Finance Authority's series 2011 public school academy limited obligation revenue and refunding bonds, issued for Detroit Service Learning Academy (DSLA). The outlook is stable. We assessed DSLA's enterprise profile as vulnerable, based on its slim waitlist and sharp enrollment decline in one historical year, though the past two years have stabilized , and weak financial management of its debt profile. In our view, some of the weakness in the enterprise profile is offset by favorable feedback from the authorizer. We assessed DSLA's financial profile as highly vulnerable due to its negative operations in two of the past three audited years with another deficit expected for fiscal 2019, resulting in below

...S&P Global Ratings affirmed its 'B' long-term rating on Michigan Finance Authority's series 2011 public school academy limited obligation revenue and refunding bonds, issued for Detroit Service Learning Academy (DSLA). The outlook is stable. We assessed DSLA's enterprise profile as vulnerable, based on its slim waitlist and sharp enrollment decline in one historical year, though the past two years have stabilized , and weak financial management of its debt profile. In our view, some of the weakness in the enterprise profile is offset by favorable feedback from the authorizer. We assessed DSLA's financial profile as highly vulnerable due to its negative operations in two of the past three audited years with another deficit expected for fiscal 2019, resulting in below 1.0x maximum annual debt service (MADS) coverage assuming smoothing of the bullet payment based on refinancing plans and a 15-year maturity, and very slim liquidity levels with reliance on short-term state aid note borrowing...

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