The general obligation bonds of a Boise County, Idaho school district were downgraded to junk on Monday.

Moody's Investors Service downgraded $1.5 million of Boise County School District No. 73's general obligation bonds to Ba1 from Baa1.

The Horseshoe Bend school district bonds are secured by the district's unlimited property tax pledge.

The downgrade primarily reflects the district's extremely stressed financial position exacerbated by its lack of reserves and funding pressures from the state, according to Moody's.

Limited liquidity and the reliance on the debt service fund to meet cash flow needs were also cited in the downgrade. The district's exceptionally small tax base coupled with below-average income levels and large declines during the recession also have created problems, according to analysts.

The strengths were a demonstrated willingness to make large expenditure reductions and the recent passage of a two-year supplemental levy.

But the district has extremely limited financial flexibility to manage future revenue declines or expenditure increases. It would take substantial and sustainable improvement in reserves and liquidity for the rating to be increased, analysts said.

Boise County does not include the state capital of Boise, which is in Ada County.

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