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Fitch Gives San Diego County’s Government a Credit Rating of AA+

The county of San Diego said June 1 that it received the highest urban county credit rating in the state from Fitch Ratings Ltd.,which analyzes municipal finances and rates debt offerings.

The county received upgraded ratings to AA from AA- on several long-term debt issues, such as its pension obligation bonds and other outstanding certificates, and received an overall credit rating of AA+.

Chief Financial Officer Donald Steuer said this marks the first time the county has been recognized with the highest urban county credit rating.

“It’s a validation that our financial management practices are consistent and strong,” said Steuer. “We have a good balance as far as maintaining solvency.”

Steuer said the high credit rating helps county taxpayers and government alike, allowing the county to borrow money at cheaper rates for such activities as funding construction and programs, and purchasing pension obligation bonds to reduce pension liabilities when equity and bond markets are doing well.

Fitch Ratings cited the county’s conservative budgeting practices and “prudent” reserves as a key to its healthy financial operations.

“We have a 17 percent reserve of general purpose revenues, which make up about 25 percent of the overall budget of $4.7 billion, or about $1 billion in general purpose revenue,” said Steuer. According to Fitch Ratings, the county has exceeded its target reserve level.

The county also ran a surplus for fiscal 2006, marking its fifth and largest surplus over the last seven years.

Steuer said that the improved credit rating reflects good management, as well as the county’s economic strength during a period of slight recession.

Fitch Ratings calculates that employment gained 1.7 percent annually in the county from 1999 to 2006.

“With the exception of the housing market, which (County Assessor) Greg Smith will tell you our diverse economy has been consistently strong,” said Steuer. “It has to do with jobs , if employment figures are good, that means more discretionary spending per household.”

Steuer added that Marin County, with an AAA rating, is the highest in the state, but it is considered a suburban county.

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Testing New ATMs:

Making deposits via ATM is going to get a lot easier for credit union members.

USA Federal Credit Union, which is based in San Diego, recently announced that it is the first credit union in the country to offer next-generation, envelope-less ATMs, providing the machines at three of its ATM locations in Eastlake, Escondido and Lake Elsinore.

Dave Sigal, vice president of finance for USA Federal, said that he volunteered his credit union as a test site for the new ATMs with advanced check-imaging technology developed by Ontario-based Co-Op Financial Services, which operates a network of 25,000 ATMs for credit unions.

“We like to stay on the bleeding edge of technology,” said Sigal. “We’re in the process of replacing all (32) of our ATMs by the end of next year.”

USA Federal tested the new technology on customers making in-branch transactions.

“Since the Eastlake branch was new, we knew we wouldn’t have a lot of traffic,” said Sigal.

“We were testing new technology while showing it off to new customers as a demonstration the transactions were happening and everything worked like it normally would, but they didn’t know their deposit was also being tested for electronic transmission (and recognition).

“We were capturing check images and sending them through to the Federal Reserve.”

With the new machines, ATM deposits pass through fewer human hands, while scanning both checks and cash for counterfeiting and processing them on the same day.

According to USA Federal spokesman Dan Greenblat, the new ATMs will decrease ATM fraud.

“About 45 percent of fraud is an empty envelope that claims to have something inside We’re figuring this will save thousands of dollar per ATM per year,” said Greenblat.

While Bank of America uses check-imaging ATMs, Sigal said he doubts that credit union-owned Co-Op Financial Services would sell or license the technology to other banks hoping to get their hands on envelope-less ATMs.

“I think Co-Op is going to keep it within the credit union community,” said Sigal.


Send finance news to Andy Killion via e-mail at

akillion@sdbj.com

. He can be reached at (858) 277-6359, ext. 3106.

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