LOS ANGELES — Moody's Investors Service downgraded a Blackfoot, Idaho school district's underlying rating two notches to Baa3 from A2 and issued a negative outlook.
The downgrade of Bingham County School District No. 55 affected $5.4 million in debt rated by Moody's, according to the July 22 report.
The district has an additional $270,000 in general obligation debt outstanding not rated by Moody's.
"The downgrade reflects a significant operating deficit in fiscal 2014, which deviated materially from prior expectations of balanced performance and has resulted in a negative fund balance and extremely narrow liquidity," Moody's wrote.
Moody's maintains a Aaa enhanced rating on the district's rated debt based on the guaranty of the Idaho School Bond Guaranty Program. That program pledges the state's sales tax revenues for debt service on qualified school districts' voter-approved general obligation bonds. Additionally, the state's Public School Permanent Endowment Fund is required to provide funds for payment of districts' debt service if funds are not available from other state sources.
The bonds are secured by the district's full faith, credit and unlimited property tax pledge.
The rating also recognizes evidence of financial stabilization in fiscal 2015, and the prospect for further improvement in fiscal 2016 based on a new higher supplemental tax levy and higher levels of per pupil state funding.
The negative outlook reflects the district's very weak financial position and the risk that the declining enrollment trend and ongoing spending pressures will challenge management's ability to not only achieve structural balance, but to eliminate the deficit fund balance.
The district is in Bingham County in southeast Idaho in the Snake River Valley.