Pinckney, Mich., Schools Hit With 4-Notch Drop

Moody’s Investors Service last week knocked its rating on Michigan’s Pinckney Community School District down four notches, to Baa1 from Aa3, and affirmed the negative outlook.

The downgrade affects $47.7 million of outstanding unlimited-tax general obligation bonds.

“The downgrade to the Baa1 rating is based on the district’s narrow preliminary audited fiscal 2012 general fund ending balance, with a significant deficit balance budgeted for fiscal year-end 2013,” rating analysts said in the report on the downgrade.

The school district in southeast Michigan also suffers from falling enrollment and a depreciating tax base, Moody’s said.

Another challenge is its reliance on short-term borrowing for cash-flow purposes.

“The negative outlook on the district’s rating reflects our expectation that finances will remain extremely pressured in the near to medium term and may further deteriorate,” Moody’s analysts said in their report.

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Michigan
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