Broward County School District downgraded by Moody's

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Moody's Ratings downgraded Broward County School District's issuer and general obligation rating to Aa3 from Aa2 Wednesday, citing lowered fund balances.

Moody's also downgraded the district's certificates of participation rating to A1 from Aa3. The outlook on the ratings were revised to stable from negative. It also assigned a MIG 1 rating to the district's proposed tax anticipation notes.

The downgrades affect $2.1 billion in outstanding debt.

Fund balances have recently been at 5% to 6% of operating revenue, lower than in recent years, and a further decline in this fiscal year is projected, Moody's said. Moody's described the fund balance in that range as "narrow."

The district recently hired a chief financial officer and it has a plan to rebuild fund balances in fiscal 2026.

For credit positives, Moody's noted the district's very strong full value per capita, low leverage, low fixed costs and lack of plans for additional borrowing.

For negatives, the ratings agency pointed to a relatively weak median household income at 84.9% of the national median and a three-year enrollment compound annual growth rate of negative 2.3%. It said student enrollment is likely to continue to shrink in the next few years due to charter schools and state empowerment scholarships.

The Broward County School District didn't immediately respond to a request for a comment.

Fitch rates Broward Schools' GO bonds AA-minus with a negative outlook.