U.S. PUBLIC FINANCE

CREDIT OPINION5 February 2020

Contacts

Kenneth R Surgenor +1.214.979.6848Analystkenneth.surgenor@moodys.com

Tatiana Killen +1.212.553.2895VP-Senior Analysttatiana.killen@moodys.com

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Lindbergh Schools, MOUpdate to credit analysis

SummaryThe credit profile of Lindbergh Schools, MO (Aa1) benefits from the district's large tax basewith proximity to St. Louis (Baa1 stable), above average resident income indices, and stablefinancial performance with maintenance of healthy reserves despite recent modest draws forone-time capital expenditures and debt defeasance. The profile is constrained by the district'selevated, but manageable debt and pension burdens.

Credit strengths

» Large tax base with proximity to City of St. Louis

» Above average resident income indices

» Trend of stable financial performance with maintenance of healthy reserves

Credit challenges

» Mature and built out nature of tax base

» Elevated debt and pension burdens

» Below average principal amortization

Rating outlookMoody's does not generally assign outlooks to local government credits with this amount ofdebt outstanding.

Factors that could lead to an upgrade

» Material decline in debt and pension burdens

» Trend of strong tax base growth that positively impacts the district's operations

Factors that could lead to a downgrade

» Trend of operating imbalance or significant capital spend down resulting in weakerreserves

» Further leveraging of the tax base absent corresponding taxable value growth

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Key indicators

Exhibit 1

Lindbergh Schools, MO 2015 2016 2017 2018 2019

Economy/Tax Base

Total Full Value ($000) $5,289,730 $5,524,700 $5,592,175 $6,155,021 $6,108,888

Population 46,412 47,215 47,738 47,738 47,738

Full Value Per Capita $113,973 $117,012 $117,143 $128,933 $127,967

Median Family Income (% of US Median) 128.1% 127.4% 125.7% 125.7% 125.7%

Finances

Operating Revenue ($000) $73,169 $75,963 $78,545 $81,309 $80,727

Fund Balance ($000) $29,616 $28,156 $31,877 $34,051 $33,326

Cash Balance ($000) $32,010 $30,564 $34,296 $36,438 $33,737

Fund Balance as a % of Revenues 40.5% 37.1% 40.6% 41.9% 41.3%

Cash Balance as a % of Revenues 43.7% 40.2% 43.7% 44.8% 41.8%

Debt/Pensions

Net Direct Debt ($000) $112,807 $113,803 $110,999 $106,994 $135,309

3-Year Average of Moody's ANPL ($000) N/A $212,128 $236,799 $250,910 $259,675

Net Direct Debt / Full Value (%) 2.1% 2.1% 2.0% 1.7% 2.2%

Net Direct Debt / Operating Revenues (x) 1.5x 1.5x 1.4x 1.3x 1.7x

Moody's - adjusted Net Pension Liability (3-yr average) to Full Value (%) N/A 3.8% 4.2% 4.1% 4.3%

Moody's - adjusted Net Pension Liability (3-yr average) to Revenues (x) N/A 2.8x 3.0x 3.1x 3.2x

Source: Lindberg's audited financial statements fiscal years 2015-19, US Census Bureau

ProfileLindbergh Schools encompasses 24 square miles in the southern section of St. Louis County (Aaa stable) and serves all of some ofthe municipalities of Crestwood, Fenton, Grantwood Village, Green Park, Kirkwood (Aa1), Lakeshire, and Sunset Hills. Enrollment wasapproximately 7,100 students for the fiscal 2020 school year.

Detailed credit considerationsEconomy and tax base: large, built out tax base with proximity to St. LouisModest annual expansion of the district's tax base is expected to continue over the near term primarily driven by redevelopment ofexisting property and minor commercial development. The district's tax base expanded 4.3% on average over the past five years,including a 9.9% increase for fiscal 2020 to a sizable $12.2 billion. Since the recessionary trough of $8.7 billion in fiscal 2013, thedistrict's base has expanded nearly 40%.

Resident income indices are above average with median family income equal to 131.3% of the US. District residents benefit from accessto employment opportunities throughout the greater St. Louis area. The St. Louis County unemployment rate of 2.3% in November2019 compares favorably to both state (3.0%) and national (3.3%) levels for the same period.

Management expects district enrollment growth to continue over the near term, though likely below the 6.7% increase experiencedover the past four years. Lindbergh Schools transitioned to a district funded full-day kindergarten program from a half-day program in2019 that allowed the district to fully capture all kindergarten students in enrollment and state aid calculations.

Financial operations and reserves: stable financial performance despite draws for one-time capital expenditures and debtdefeasanceDistrict reserves are expected to remain healthy over the near term given increased state aid and conservative budgeting practices. Infiscal 2019, the district's operating funds (general, special revenue (teachers'), and debt service funds) posted a $1 million drawdownattributable to a $1.8 million debt defeasance. The drawdown reduced available operating reserves to $33.3 million, representing ahealthy 41.3% of operating revenues.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 5 February 2020 Lindbergh Schools, MO: Update to credit analysis

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Despite a sizable increase in teacher salaries in fiscal 2020, management anticipates a modest operating surplus given an increase instate aid related to the change to full-day kindergarten, repurposed funding in other areas, and greater than anticipated property taxcollections.

LIQUIDITYThe district closed fiscal 2019 with $23.3 million in general fund liquidity, representing 31.4% of general fund revenues. Inclusive ofdebt service reserves, operating liquidity closed at $33.7 million, representing 41.8% of operating revenues.

Debt and pensions: elevated, but manageable debt and pension burdens; pension contributions exceed “tread water”The district's debt burden, while elevated, will remain manageable given the lack of additional near term issuance plans. Following themost recent sale, the district will have $186.6 million in GOULT debt outstanding and $7.1 million in COPs, representing a net directdebt burden of 2.8% of fiscal 2020's full value. The district does not have plans to issue additional bonded debt in the near term.

DEBT STRUCTUREAll of the district's debt is fixed rate and matures over the long-term (final maturity in fiscal 2041). Principal amortization is belowaverage with 39.1% of principal repaid within ten years.

DEBT-RELATED DERIVATIVESThe district is not party to any interest rate swaps or other derivative agreements.

PENSIONS AND OPEBThe district's elevated pension burden is growing and outsized compared to peers in the rating category. Lindbergh Schools participatesin two multi-employer cost sharing pension plans, the Public School Retirement System of Missouri (PSRS) and the Public EducationEmployee Retirement System of Missouri (PEERS). Budgetary pressure related to previous underfunding of the pension plans isexpected to remain manageable in the near-term as the annual statutory increase in the total contribution rate may not exceed 1% ofpay for PSRS and 0.5% of pay for PEERS. The district's contributions of $5.2 million to PSRS and $697 thousand to PEERS totaled $5.9million for fiscal 2019, representing 7.3% of operating revenues.

Moody's three-year average adjusted net pension liability (ANPL) for the district, under our methodology for adjusting reportedpension data, equaled $259.7 million in fiscal 2019 or an elevated 3.2 times operating revenues and 4.3% of the district's full valuation.Moody's ANPL reflects certain adjustments we make to improve the comparability of reported pension liabilities and are not intendedto replace the district's reported liability information.

While the pension burden is elevated relative to peers, the district's contributions have exceeded “treadwater” each of the past fouryears. In fiscal 2019, the contribution exceeded “treadwater” by roughly 12% which represents less than 1% of operating revenues.The “tread water” indicator measures the annual government contribution required to prevent the reported net pension liability fromgrowing, under reported assumptions including the above average 7.5% discount rate. Contributions above the tread water level coverall net pension liability interest plus pay down some principal, making them stronger from a credit perspective than contributionsbelow this level.

Management and governance: moderate institutional framework scoreThe district is governed by a seven member board of directors elected at large to three year staggered terms. The board appoints thedistrict's superintendent who is responsible for the day-to-day operations of the district.

Missouri School Districts have an Institutional Framework score of A, which is moderate. The sector's major revenue sources are subjectto a cap via the Hancock Amendment which can be overridden with voter approval only. Unpredictable revenue fluctuations tend to beminor, or under 5% annually. Across the sector, fixed and mandated costs are generally less than 25% of expenditures. Unpredictableexpenditure fluctuations tend to be minor, under 5% annually.

3 5 February 2020 Lindbergh Schools, MO: Update to credit analysis

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Rating methodology and scorecard factorsThe US Local Government General Obligation Debt methodology includes a scorecard, a tool providing a composite score of a localgovernment’s credit profile based on the weighted factors we consider most important, universal and measurable, as well as possiblenotching factors dependent on individual credit strengths and weaknesses. Its purpose is not to determine the final rating, but rather toprovide a standard platform from which to analyze and compare local government credits.

Exhibit 2

Lindbergh Schools, MO

Rating Factors Measure Score

Economy/Tax Base (30%) [1]

Tax Base Size: Full Value (in 000s) $6,984,356 Aa

Full Value Per Capita $146,306 Aa

Median Family Income (% of US Median) 125.7% Aa

Finances (30%)

Fund Balance as a % of Revenues 41.3% Aaa

5-Year Dollar Change in Fund Balance as % of Revenues 4.7% A

Cash Balance as a % of Revenues 41.8% Aaa

5-Year Dollar Change in Cash Balance as % of Revenues 0.9% A

Management (20%)

Institutional Framework A A

Operating History: 5-Year Average of Operating Revenues / Operating Expenditures 1.0x A

Debt and Pensions (20%)

Net Direct Debt / Full Value (%) 2.8% A

Net Direct Debt / Operating Revenues (x) 2.4x A

3-Year Average of Moody's Adjusted Net Pension Liability / Full Value (%) 3.7% A

3-Year Average of Moody's Adjusted Net Pension Liability / Operating Revenues (x) 3.2x A

Notching Factors:[2]

Other Analyst Adjustment to Debt and Pensions Factor (specify): Managable fixed costs with pension contributions that

exceeded "tread water" each of the past four yearsUp

Scorecard-Indicated Outcome Aa2

Assigned Rating Aa1

[1] Economy measures are based on data from the most recent year available.[2] Notching Factors are specifically defined in the US Local Government General Obligation Debt methodology.[3] Standardized adjustments are outlined in the GO Methodology Scorecard Inputs publication.Source: Moody's Investors Service; US Census Bureau

4 5 February 2020 Lindbergh Schools, MO: Update to credit analysis

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6 5 February 2020 Lindbergh Schools, MO: Update to credit analysis