NEW YORK - Moody's Investors Service said it has downgraded to A2 from A1 the rating on Anchor Bay School District, Mich.’s general obligation unlimited tax debt. The A2 rating and negative outlook apply to $136.3 million of outstanding general obligation debt.
The outstanding bonds are secured by the district's general obligation unlimited tax pledge.
The downgrade to the A2 rating primarily reflects the district's steadily weakened financial position and limited general fund reserves, which have followed multiple years of declines in student enrollment.
Also incorporated in the current rating is the district's modestly sized and depreciating tax base and elevated debt burden.
The assignment of the negative outlook reflects Moody's expectation that the district's narrow financial position will continue to be vulnerable to continued declines in enrollment and operating revenue.
Additionally, it reflects the uncertainty around the potential increase in the district's pension contributions and the potential effect on the district's operations if it fails to pass.