Fitch Ratings downgraded to BBB-plus from A-minus $30 million of general obligation bonds issued by the Lincoln Park School District outside Detroit.
The district is facing a deteriorating financial position led by a decline in state aid, its chief revenue source, according to Fitch. The outlook has been revised to stable at the lower rating, and analysts expect fiscal weakness to continue.
The district, which serves the city of Lincoln Park, is located in southwest Wayne County about 12 miles outside Detroit. Declines in state aid from Michigan — which totaled $28 million, or 80% of the district’s revenue in 2009 — have led to operating deficits in three of the last four years, analyst Dana Sodikoff wrote in a release on the downgrade.
Faced with minimal reserves, the system recently created a community- and school-based task force charged with crafting a proposal to cut costs and build general fund balances.
“Appropriate expenditure cuts will be necessary to manage waning revenues caused by declining student enrollment and reductions in state aid,” Sodikoff said.
