Great news for Oxford Village.

S&P Global Ratings raised the municipality’s long-term bond (or credit) rating. The village went from A to AA- with a “stable” outlook.

AA- means Oxford has a “very strong capacity to meet financial commitments.” A stable outlook means the long-term rating “is not likely to change” over the next two years.

Councilman Erik Dolan was “elated to hear” the news.

“I think it’s a preliminary signal that the village is headed in the right direction,” he said.

Dolan believes “there’s a direct correlation” between the improved bond rating and the “choices and actions” of council.

He cited, as an example, council’s decision last year to switch from local to Oakland County as the provider of police dispatch services. This is expected to result in an estimated savings of $148,000 for the 2017-18 fiscal year, which begins July 1.

“(This) freed up disposable income for the village,” Dolan said.

Dolan also noted the village is in the process of selling bonds to refund two existing capital improvement bonds, the interest rates for which are 4.68 percent and 4.77 percent. It’s anticipated the village will be able to pay off these refunding bonds at a lower interest rate. Right now, the estimated rate is 2.7 percent, which is expected to save the village a total of $213,000 in interest payments between now and 2028. The combined balance on the two existing bond issues to be refunded is $2.39 million.

“The upgrade reflects our opinion that the village’s budgetary performance has improved, which in turn has improved the village’s budgetary flexibility [ i.e. available reserves] – though it is still nominally low on a dollar basis,” said S&P Global Ratings analyst Errol Arne in a press release.

As of June 30, 2016, the village had an available fund balance (or reserves) of $490,237, or 22.5 percent of operating expenditures. This resulted in “a one-notch downgrade” of the bond rating because S&P Global Ratings views this as “vulnerably low and a negative credit factor.”

“We expect the village’s available reserves to remain very strong over the next two years and if the reserves build to greater than $500,000, we would look for the village to sustain above that amount for at least two years before considering a higher rating,” stated the press release from S&P Global Ratings.

Previously, the village held a rating of AA- from 2008 until January 2012, when it was downgraded to A, which means there is a “strong capacity to meet financial commitments, but (the municipality is) somewhat susceptible to adverse economic conditions and changes in circumstances.” The village has maintained its A rating until now.

S&P Global Ratings’ system ranges from AAA, which denotes an extremely strong capacity to meet financial commitments, to D, which represents default on financial commitments or breach of an imputed promise.

These ratings express S&P Global Ratings’ opinion about the ability and willingness of a public or private entity to meet its financial obligations in full or on time, according to the company’s website. These ratings can also speak to the credit quality of a particular debt issue, such as a municipal bond, and the relative likelihood that the issue may default, the website states.