The passage of New York’s budget is a credit positive for less affluent school districts struggling to overcome constraints caused by the state’s new 2% cap on annual increases in property tax levies, Moody’s Investors Service said in a report.
The cap will take effect in 2013.
Fifty-two percent of the increase in school aid in fiscal 2013 is for general operating aid, and 76% of that will go to high-needs school districts, defined as those with high rates of poverty relative to the district’s wealth, analysts said.
The state considers about one-third of its 676 school districts to be high need, including those in its five largest cities: Buffalo, which is rated A2 with a positive outlook; Rochester, rated Aa3; Syracuse, rated A1, Yonkers, rated Baa1 with a negative outlook, and New York City, rated Aa2 with a stable outlook.
The cities issue debt on behalf of their school systems.
Moody’s rates the state’s general obligation bonds Aa2.
Fitch Ratings and Standard & Poor’s both assign AA ratings.
