Schools in Lake Elsinore, Calif. Downgraded

LOS ANGELES — Moody's Investors Service downgraded Lake Elsinore Unified School District, Calif.'s issuer rating to A3 from A2, dropped the rating on its Series 2010 certificates of appreciation to Baa2 from Baa1, and assigned a negative outlook.

The downgrades, which affected $36.7 million in debt, reflect the district's "extremely weak financial position that continued to deteriorate in fiscal 2014 and fiscal 2015 despite improved state and local funding," Moody's analysts wrote in the July 28 report.

Analysts also cited the district's extremely narrow reserves and liquidity and history of deficit spending for the downgrade.

The district's large, diverse tax base, and moderate debt burden paid through a community facilities district have enabled it to retain the investment grade rating, according to the report.

The rating is additionally enhanced by strong state and county oversight, according to the report.

Analysts attributed the negative outlook to extremely limited financial flexibility to manage unexpected costs due to very narrow cash reserves.

"While we expect that district's fiscal position will gradually improve, the rating will likely face mounting downward pressure if the district's financial-management practices deteriorate," analysts wrote.

The school district is in Riverside County, roughly 40 miles south of Los Angeles. It has an enrollment of more than 21,500 students.

The lease revenue bonds are secured by the district's covenant to annually budget and appropriate lease payments for the use and occupancy of Lakeland Village Middle School.

 

 

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