Fitch Ratings last week dropped Canton City School District’s unlimited-tax general obligation debt to A from A-plus.
The negative credit action was prompted by the district’s weak financial position and future challenges, according to Fitch.
The downgrade affects $44.5 million of GO bonds. The rating agency also lowered its rating on $2.1 million of special-obligation tax anticipation notes to A-minus from A. Analysts warned of further action by revising the district’s outlook to negative from stable.
The school system is located 60 miles from Cleveland and serves most of Canton City and a few surrounding municipalities.
The district has made a series of cuts but it has not been enough to offset revenue declines, Fitch said.
School officials are considering asking voters for a new property tax levy in November, but historically voters have not approved similar requests.
“Without a new property tax levy, significant expenditure cuts will be required in order to achieve and maintain structurally balanced operations,” analysts warned in the downgrade report.
