Standard & Poor's Ratings Services said it has lowered its underlying rating for credit program on Trinity Area School District, Pa.'s existing general obligation debt two notches to A-minus from A-plus.
The outlook is negative.
As a result, Standard & Poor's has revised its underlying rating on the debt one notch to A from A-plus reflecting the security provided by the Pennsylvania State Aid Intercept Program. The outlook is stable.
"The downgrade is due to a structural imbalance caused by the district's failure to raise taxes to keep pace with rising costs as well as a deterioration of available reserves," said Standard & Poor's credit analyst Christina Marin.
The district has also deferred $2.3 million of teachers' salaries in an effort to balance the budget. The negative outlook is based on the underlying rating on the potential for short-term fiscal pressures to continue despite steps management is taking to bring the budget back into balance. Without deferral of these salary payments, available reserves would be negative.
The district's full-faith-and-credit pledge secures the bonds. Trinity Area School District's participation in the Pennsylvania State Aid Intercept Program, under Section 633 of the Pennsylvania Public School Code of 1949, provides additional security to repayment.
