Standard & Poor's Ratings Services said it lowered its underlying rating on Lakewood Public Schools, Mich.'s outstanding general obligation debt to A from A-plus.
The outlook is negative.
At the same time, it assigned its AA-minus program rating with a stable outlook and A underlying rating with a negative outlook to the district's series 2015 GO (unlimited-tax) refunding bonds.
"The downgrade reflects our view of the structural imbalance in the district's general fund budget amid declining enrollment, a key determinant of operating revenues," said Standard & Poor's credit analyst Scott Nees.
The district has run operating deficits in each of the past three consecutive audited fiscal years and is on the verge of a fourth, which, if fully realized, will leave year-end reserves at about 4% of expenditures.
"The negative outlook reflects our uncertainty regarding the district's ability to bring the budget back into structural balance," he added, "and our view of the potential for further drawdowns that could leave the school in an even weaker financial position."
