Standard & Poor's Ratings Services said it lowered its long-term rating and underlying rating (SPUR) to A-plus from AA-minus on Maricopa County Unified School District No. 41 (Gilbert), Ariz.'s general obligation debt outstanding.
The outlook is negative.
"The downgrade is based on our view of the loss of support for the district's levy overrides, which reduces budget flexibility and creates a significant operating deficit, as well as the swift decline in the district's financial position in fiscal 2012, which we believe was the result of an error in setting the district's tax rate," said Standard & Poor's credit analyst Sarah Sullivant.
The negative outlook reflects the view of the sizeable structural deficit created by the loss of the district's override capacity and the uncertainty surrounding its ability to restore operating balance without an increase in revenues. The rating agency could revise the outlook to stable if the district makes the cuts required to restore balanced operations and regains flexibility through higher budget balances and increased reserve levels. It could lower the ratings if operating adjustments are not made and budget flexibility declines further.
