Standard & Poor's Ratings Services said it lowered its underlying rating to A from A-plus on Belle Plaine Community School District, Iowa's general obligation bonds.
The outlook is negative.
"The downgrade and the negative outlook reflect the district's draws on available reserves in the past three fiscal years that have weakened its available fund balance to a level that, in our view, is no longer comparable to peers at the A-plus rating," said Standard & Poor's credit analyst Anna Uboytseva. "Although management is working on reducing the budget, we believe that the budget imbalances will continue into 2016 given current projections."
The district's financial position has weakened over the past two years due to consecutive general fund deficits of $348,000 and $147,000 in fiscal 2013 and 2014, respectively. At the end of fiscal 2014 (June 30), the total available general fund balance decreased to $1 million, or 17.8% general fund expenditures, which is considered very strong. Management attributes the use of reserves to declining enrollment and higher staff levels.
