Moody’s Investors Service last week downgraded its underlying rating on the Spring Lake Park Independent School District’s debt to A3 from A2 due to narrow general fund reserves and limited financial flexibility.
The action affects $125 million of debt, including an upcoming $6.2 million general obligation sale, although the bonds carry an Aa2 rating due to coverage from the state’s school district credit enhancement program. The district is issuing taxable bonds to fund its other post-employment benefits trust.
Analysts attributed the downgrade to the district’s narrow general fund reserves, limited financial flexibility which is not expected to improve significantly over the near term, and elevated debt burden with relatively slow principal amortization.
