School’s Double Whammy

Moody’s Investors Service last week downgraded to A2 from Aa3 the underlying rating on the Harper Woods City School District, and assigned a negative outlook.

The move affects $31 million of outstanding general obligation debt. The negative credit action comes as the district suffers from a weakened financial position and limited reserves aggravated by declining enrollment and an above-average debt burden, Moody’s said.

Harper Woods is located in Wayne County outside Detroit. Its location is both a strength, as it gives it access to a major metropolitan area, and a drawback, as it suffers from a depreciating tax base and weak economy.

The Harper Woods school system, like many districts in Michigan, relies heavily on state aid, which is determined through enrollment. That reliance could mean future challenges as the state deals with its own pressures, Moody’s said.

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