## U.S. Public Finance ## CREDIT OPINION 23 March 2026 ## Contacts ## Isabella Romano+1.312.706.9960 ## Associate Lead Analyst isabella.romano@moodys.com ## Gera M. McGuire+1.312.706.9977 ## Associate Managing Director gera.mcguire@moodys.com ## CLIENT SERVICES ## Americas1-212-553-1653 ## Asia Pacific852-3551-3077 ## Japan81-3-5408-4100 ## EMEA44-20-7772-5454 ## Waconia Independent School District 110, ## MN Update to credit analysis ## Summary Waconia Independent School District 110, MN's (Baa1) credit profile balances the district’s strong local economy, stable enrollment, moderate leverage and improved finances against its recent history of negative fund balance. Credit strengths »Growing local economy in the Twin Cities metro area with strong resident incomes and a strong full value per capita »Growing reserves Credit challenges »Somewhat elevated leverage »Declining enrollment forecast for the next five years Rating outlook We do not assign outlooks to local governments with this amount of debt outstanding. Factors that could lead to an upgrade »Maintenance of available fund balance ratio above 10% »Maintenance of leverage ratio below 250% Factors that could lead to a downgrade »Any significant decline in reserve ratios »Leverage ratio approaching 400% ## Moody's Ratings ## U.S. Public Finance Key indicators Exhibit 1 ## Waconia Independent School District 110, MN 2022202320242025Baa Medians ## Economy Resident income147.7%147.2%146.1%N/AN/A Full value ($000)$3,775,255$4,412,202$4,636,199$4,739,566$855,377 ## Population21,81122,43022,791N/A13,512 Full value per capita$173,090$196,710$203,422N/A$87,529 ## Enrollment4,0494,0454,0003,9841,632 Enrollment trend-0.6%-0.8%-0.4%-0.5%N/A Financial performance Operating revenue ($000)$61,815$62,906$66,298$66,550$28,875 Available fund balance ($000)-$3,231-$3,071$4,258$9,191$4,818 Net cash ($000)$6,718$7,745$15,953$20,813$5,260 Available fund balance ratio-5.2%-4.9%6.4%13.8%17.8% Net cash ratio10.9%12.3%24.1%31.3%21.8% ## Leverage Debt ($000)$112,117$105,282$104,311$106,469$19,060 ## ANPL ($000)$124,885$96,039$87,392$58,880$34,760 ## OPEB ($000)$4,774$5,170$5,361$5,532$2,998 Long-term liabilities ratio391.1%328.3%297.2%256.8%N/A Implied debt service ($000)$8,375$7,830$7,314$7,219$1,373 Pension tread water ($000)$2,178$3,465$3,429$2,594$1,333 OPEB contributions ($000)$133$73$44$358$178 Fixed-costs ratio17.3%18.1%16.3%15.3%N/A For definitions of the metrics in the table above please refer to the US K-12 Public School Districts Methodology or see the Glossary in the Appendix below. Metrics represented as N/A indicate the data were not available at the time of publication. The medians come from our most recently published K12 Median Report. Sources: US Census Bureau, Waconia Independent School District 110, MN’s financial statements and Moody’s Ratings ## Profile Waconia ISD 110 is located 40 miles southwest of the Twin Cities metropolitan area and serves a population of about 22,800 residents. The district offers comprehensive educational programs to around 4,000 students in kindergarten through the twelfth grade. Detailed credit considerations The district benefits from a stable economic base with growing population and strong resident income ratio and full value per capita. While management projects roughly stable enrollment, actual enrollment may grow because of some notable ongoing residential development that is not included in the projections. Leverage has improved and will remain moderate because the district does not have any additional debt plans. The district's financial position will likely continue to improve because management expects to end fiscal 2026 (year-end June 30) with a roughly $1 million surplus based on year-to-date results. Also, the district's voters approved an operating levy increase in November 2025 that will generate about $3 million in additional revenue in fiscal 2027. This will help absorb 5% salary increases in fiscal 2027, the final year of the district's four-year labor contracts. The district closed fiscal 2025 with a roughly $5 million general fund surplus, bringing the available fund balance ratio to about 14%. Fiscal 2025 was the district’s second consecutive year of positive fund balance and was significantly improved from five years ago when the fund balance ratio reached negative 8.6%. The improvement was driven by new management, voter-authorized levy increases, increased state funding for the special education cross-subsidy and significant expenditure cuts. This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the issuer/deal page on https://ratings.moodys.com for the most updated credit rating action information and rating history. 2 23 March 2026Waconia Independent School District 110, MN: Update to credit analysis ## Moody's Ratings ## U.S. Public Finance ## Economy Exhibit 2 ## Enrollment Enrollment (LHS)Enrollment trend (three-year CAGR in enrollment) (RHS) 20212022202320242025 0 1,000 2,000 3,000 4,000 −0.8% −0.7% −0.6% −0.5% −0.4% −0.3% ## Source: Moody's Ratings Financial operations Exhibit 3 ## Financial Trends 0.0% 10.0% 20.0% 30.0% 202020212022202320242025 Fund Balance as a % of RevenuesCash Balance as a % of Revenues ## Source: Moody's Ratings ## Leverage ## Pensions and OPEB Minnesota school districts' ANPLs are primarily attributable to their participation in the Teachers Retirement Association of Minnesota (TRA). As of fiscal 2024, government contributions in aggregate amounted to around 12% of payroll, below our tread water indicator, which was around 13%. While results will vary across US public pension systems, we generally expect local governments’ fiscal year 2026 ANPLs to fall by another 20% based on our aggregate estimates, because of rising interest rates and above-target investment returns in 2025. ESG considerations ## Environmental Environmental risk is generally low for the local government sector. Environmental concerns are factored into district's credit quality but are not a major drivers at this time. 3 23 March 2026Waconia Independent School District 110, MN: Update to credit analysis ## Moody's Ratings ## U.S. Public Finance ## Social Social considerations are a factor in the district's credit profile. The median age of district residents (37) is below the state (39) and national medians (39). The district's population has increased by roughly 10% since 2020, totaling around 22,800 residents in 2024. Resident incomes are about 147% of the US. ## Governance Governance is a key credit consideration for all local government issuers. The district's new management team has shown a commitment to conservative budgeting and a willingness to pursue additional revenue and expenditure reductions when needed. The district has a formal fund balance policy to maintain an unassigned general fund balance equivalent to 5% of the annual operating expenses. The district is in line with this policy as of fiscal 2025, and management intends to continue rebuilding reserves. Minnesota school districts have an Institutional Framework score of A. The state controls the bulk of school district revenue through a per-pupil funding formula. The state has provided for regular annual increases in the funding formula for several years but has occasionally delayed disbursements. 4 23 March 2026Waconia Independent School District 110, MN: Update to credit analysis ## Moody's Ratings ## U.S. Public Finance Rating methodology and scorecard factors The US K-12 Public School Districts Methodology includes a scorecard that summarizes the rating factors generally most important to school district credit profiles. Because the scorecard is a summary and may not include every consideration in the credit analysis for a specific issuer, a scorecard-indicated outcome may or may not map closely to the actual rating assigned. Exhibit 4 ## Waconia Independent School District 110, MN ## MeasureWeightScore ## Economy ## Resident Income (MHI Adjusted for RPP / US MHI)146.1%10.0%Aaa Full value per capita (full valuation of the tax base / population)207,95810.0%Aaa Enrollment trend (three-year CAGR in enrollment)-0.5%10.0%A Financial performance Available fund balance ratio (available fund balance / operating revenue)13.8%20.0%A Net cash ratio (net cash / operating revenue)31.3%10.0%Aaa Institutional framework ## Institutional FrameworkA10.0%A ## Leverage Long-term liabilities ratio ((debt + ANPL + adjusted net OPEB) / operating revenue)256.8%20.0%A Fixed-costs ratio (adjusted fixed costs / operating revenue)15.3%10.0%Aa Notching factors No notchings applied ## Scorecard-Indicated OutcomeAa3 ## Assigned RatingBaa1 The complete list of outstanding ratings assigned to the Waconia Independent School District 110, MN is available on their issuer page. Details on the current ESG scores assigned to the Waconia Independent School District 110, MN are available on their ESGView page. Sources: US Census Bureau, Waconia Independent School District 110, MN’s financial statements and Moody’s Ratings 5 23 March 2026Waconia Independent School District 110, MN: Update to credit analysis ## Moody's Ratings ## U.S. Public Finance ## Appendix Exhibit 5 ## Key Indicators Glossary ## DefinitionTypical Source* ## Economy ## Resident incomeMedian Household Income (MHI), adjusted for Regional Price Parity (RPP), as a % of the US ## MHI: American Community Survey (US ## Census Bureau) ## RPP: US Bureau of Economic Analysis Full value ($000)Estimated market value of taxable property accessible to the districtState repositories, district’s audited financial reports, offering documents or continuing disclosure PopulationPopulation of school districtAmerican Community Survey (US Census ## Bureau) Full value per capitaFull value / population of school district EnrollmentStudent enrollment of school districtState data publications Enrollment trend3-year Compound Annual Growth Rate (CAGR) of EnrollmentState data publications; Moody’s Ratings Financial performance Operating revenue ($000)Total annual operating revenue in what we consider to be the district's operating funds Audited financial statements Available fund balance ($000)Committed, assigned and unassigned fund balances in what we consider to be the district's operating funds Audited financial statements Net cash ($000)Net cash (cash and liquid investments minus short-term debt) in what we consider to be the district's operating funds Audited financial statements Available fund balance ratioAvailable fund balance / Operating RevenueAudited financial statements Net cash ratioNet Cash / Operating RevenueAudited financial statements ## Leverage Debt ($000)District's direct gross debt outstandingAudited financial statements; official statements ANPL ($000)District's pension liabilities adjusted by Moody's to standardize the discount rate used to compute the present value of accrued benefits Audited financial statements; Moody’s ## Ratings OPEB ($000)District's net other post-employment benefit (OPEB) liabilities adjusted by Moody's to standardize the discount rate used to compute the present value of accrued benefits Audited financial statements; Moody’s ## Ratings Long-term liabilities ratioDebt, ANPL and OPEB liabilities as % of operating revenueAudited financial statements, official ## statements; Moody’s Ratings Implied debt service ($000)Annual cost to amortize district's long-term debt over 20 years with level payments Audited financial statements; official ## statements; Moody’s Ratings Pension tread water ($000)Pension contribution necessary to prevent reported unfunded pension liabilities from growing, year over year, in nominal dollars, if all actuarial assumptions are met Audited financial statements; Moody’s ## Ratings OPEB contributions ($000s)District’s actual contribution in a given period, typically the fiscal yearAudited financial statements; official statements Fixed-costs ratioImplied debt service, pension tread water and OPEB contributions as % of operating revenue Audited financial statements, official statements, pension system financial statements *Note: If typical data source is not available then alternative sources or proxy data may be considered. For more detailed definitions of the metrics listed above please refer to the US K-12 Public School Districts Methodology. ## Source: Moody's Ratings 6 23 March 2026Waconia Independent School District 110, MN: Update to credit analysis ## Moody's Ratings ## U.S. Public Finance © 2026 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved. CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED OR OTHERWISE MADE AVAILABLE BY MOODY’S (COLLECTIVELY, “MATERIALS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. 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For the purposes of this disclaimer, “PRC” refers to the mainland of the People’s Republic of China, excluding Hong Kong, Macau and Taiwan. ## REPORT NUMBER1478356 8 23 March 2026Waconia Independent School District 110, MN: Update to credit analysis ## Moody's Ratings ## U.S. Public Finance ## CLIENT SERVICES ## Americas1-212-553-1653 ## Asia Pacific852-3551-3077 ## Japan81-3-5408-4100 ## EMEA44-20-7772-5454 9 23 March 2026Waconia Independent School District 110, MN: Update to credit analysis