Moody’s Investors Service has cut its rating to Baa2 from Baa1 on the Cleveland Municipal School District’s general obligation debt.
The downgrade affects roughly $161 million of debt. The outlook is stable.
The downgrade comes about a month after Moody’s downgraded the GO debt issued by the city of Cleveland to A3 and assigned a negative outlook. Last week Fitch Ratings revised its outlook on the district to negative and affirmed its BBB-plus rating.
Moody’s said the downgrade comes as the district faces strained financial operations, thin liquidity, a weak regional economy, and a possible increase in the amount of property tax delinquencies.
At the same time, Moody’s said the district is expected to remain somewhat stable through 2011 due to its recently adopted “transformation plan,” which includes school closures and significant spending cuts. Part of the district’s problem is that voters have not approved a new tax levy since 1996.
