Moody’s Investors Service has downgraded Becker Independent School District 726’s general obligation credit by two notches due to its declining fiscal position. The rating was cut to A2 from Aa3 on $23 million of debt.
“The downgrade to an A2 rating reflects the district’s deterioration of its financial position and liquidity following several years of general fund operating deficits, limited revenue-raising flexibility, and regular use of general fund reserves to support ongoing operations,” Moody’s analysts wrote.
The A2 reflects the district’s moderately sized tax base, with average resident income levels and a manageable debt burden, as well as plans for additional debt in the near future.
The credit benefits from the district’s proximity to the Twin Cities area but is challenged by its narrow liquidity, reliance on state aid, an expected decline in its tax base, and declining enrollment.