Rockford Public School, Mich., Downgraded to A2 by Moody's

Moody's Investors Service said it has downgraded Rockford Public School, Mich.'s underlying general obligation rating to A2 from A1 and assigned a negative outlook.

Concurrently, Moody's has assigned an A2 underlying rating with a negative outlook and Aa2 enhanced rating to the district's $35 million general obligation unlimited tax (GOULT) 2014 school building and site bonds.

Debt service on the Series 2014 bonds is secured by the district's GO unlimited tax pledge which benefits from a dedicated levy to pay debt service on outstanding GOULT bonds and the state of Michigan's (Aa2/positive) school bond qualification and loan program (SBQLP). Proceeds of the 2014 bonds will finance security, technology and capital improvement projects. Post-sale, the district will have $121.8 million of GO debt outstanding.

The A2 underlying rating reflects the district's narrow general fund and cash reserves, strong income indices and moderate tax base, as well as it's above average debt burden and elevated pension liability.

The negative outlook reflects the district's history of negative variances and likely continuance of operational pressures. Additional draws on reserves could warrant a further downgrade.

The enhanced Aa2 rating and positive outlook is due to the additional security provided by the state of Michigan's school bond qualification and loan program (SBQLP) and is based on the state's rating. The state's Department of Treasury is expected to grant final qualification upon the sale of the bonds.

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