Township Maintains AAA Bond Rating
Bloomfield Township has maintained a AAA bond rating from Standard & Poor’s Rating Services and a Aaa bond rating from Moody’s Investor Service for the last six years, a reflection of the Township’s exceptionally strong financial practices. These are the highest ratings issued by the firms and achieved by only 16 out of 1,500 municipalities in the State of Michigan.
The AAA and Aaa bond ratings are given on the basis of the Township’s sizeable and affluent residential tax base, the willingness of residents to support Township government, and very strong operating fund balance and liquidity. The ratings reflect the Township’s strong financial operations and healthy reserves, and forward-looking management team. The Township is fiscally responsible, carefully managing resources to maximize their benefit for the residents. Bloomfield Township has always been and continues to be very proactive in anticipating and preparing for financial challenges. Residents deserve a great deal of credit for their consistent support of the Township, as this is a consideration in determining the ratings.
The passage of Public Act 202 of 2017 mandated that all municipalities fund 40 percent of OPEB (Other Post-Employment Benefits). Bloomfield Township, like most other municipalities, has always operated within state guidelines on a “pay as you go” basis. But because of Public Act 202, the Township is now facing a $5 million annual shortfall in funding public safety OPEB and retirement benefits. On May 20, 2019, the state approved the Township’s Corrective Action Plan to fund OPEB and retirement benefits at the mandated level. The Township presented two alternatives: raising funds by approval of a public safety SAD; or, alternatively, making deep cuts to Police, Fire and EMS in order to balance the budget.
Because the Township is facing this shortfall, Moody’s has reaffirmed the Aaa bond rating; however, with an outlook of negative, waiting to see the outcome of the SAD election. Although the Township currently has very healthy reserves, there is the danger of spending them down if the SAD does not pass. The rating agencies recognize that the Township is being proactive in dealing with the budget shortfall and therefore have not reduced the AAA rating.
For information on the proposed Public Safety SAD click here.