1. City of DeKalb, Illinois Rating Update
October 27, 2015

2. Moody’s Investor Rating Surveillance Rating
Moody’s confirmed the City’s outstanding “Aa2” rating and put a negative outlook on it
The negative outlook is due to higher pension liability based on Moody’s restatement, persistent declines in the equalized assessed valuation and dependence on revenues from the State of Illinois
Moody’s will continue to monitor the City
The following conditions could make the rating increase:
Expansion and diversification of the tax base
Continued growth in the City's reserves and liquidity
Moderation of the City's debt and pension burdens
The following conditions could make the rating decrease:
Continued deterioration in the tax base
Material declines in the City’s reserves and liquidity
Increase in the City's debt or pension burden 1

3. Rating Categories and Definitions2

4. Revised Rating Criteria from Moody’s
Debt/Pensions increased from 10% weight factor to 20% 3

5. Calculation of Moody’s ANPL4

6. Moody’s Focus on Pension Liability
Moody’s puts greater focus on annual net pension liabilities (ANPL) which they calculate using their own methodology
One of the big differences from the PUC methodology is the discount rate on cashflows: 4.6% versus 7.5%
Below is Moody’s calculated ANPL for the last several years:
ANPL ($000s)
2010: $82,677    
2011: $82,417
2012: $117,700  
2013: $115,376  
2014: $123,120
The then look at this look at this liability divided by annual general fund revenues to come up with a ratio
The City’s ratios of general fund revenues to ANPL is 3.6 and they state that the median for Aa2 rated issuers is lower (between 1 and 2) 5

7. Current Debt Profile 6

8. Notice and Disclaimer
The accompanying information was obtained from sources which William Blair & Company, L.L.C. believes to be reliable but does not guarantee its accuracy and completeness.
The material has been prepared solely for informational purposes and is not a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy.
Historical data is not an indication of future results.
The opinions expressed are our own unless otherwise stated.
Additional information is available upon request.
Contact Information:
Elizabeth M. Hennessy
Managing Director
Phone: (312)
Fax: (312)
William Blair & Company
222 West Adams
Chicago, Illinois 7