Powell and Liberty Township both earned upgraded bond ratings this year from Standard and Poor's Rating Services.

Powell and Liberty Township both earned upgraded bond ratings this year from Standard and Poor's Rating Services.

S&P evaluates entities and assigns them a letter grade from D to AAA that reflects their financial health and ability to receive loans or negotiate lower finance rates on current bonds. The credit ratings are to a municipality what a credit score is to an individual.

In September, Powell's rating was upgraded to AAA, the highest-possible rating a municipality can receive. In August, S&P upgraded Liberty Township to AA-plus status.

"We view the city's management conditions as very strong with robust financial practices, combined with an ability to maintain balanced budgets," according to the S&P summary report that explained Powell's rating. "The city typically uses three to four years of historic data to make revenue and expenditure assumptions."

Factors that S&P considered when upgrading Powell's rating included its apparent budgetary flexibility and the expectation that the city will have a surplus in its 2013 general fund.

"This rating enables the city to receive the lowest-possible interest rates on its sale of general-obligation bonds, which saves city taxpayers a considerable amount of money," City Manager Steve Lutz said in a press release. "It also provides an independent assessment from an external expert of the city's conservative fiscal management practices and policies."

The summary report for Liberty Township attributed its upgrade to a strong market value per capita ($132,928 per resident) and a low direct-debt burden.

"The upgrade reflects the consistent financial profile that has enabled the township to build very strong reserves, albeit on a cash basis, despite recent state legislation that eliminated a source of general-fund revenues for the township," S&P's assessment report said.

The township is responsible for more than $5 million in general-obligation bonds that were taken out in 2006 for a community recreation center.

Although the rating is useful in the cases of refinancing or future bonds, Township Administrator Dave Anderson said possibly the most important result of the upgraded rating is that it recognizes the hard work of Liberty employees and leaders who have shown fiscal responsibility by earning grants, sharing services and creating sustainable budgets.