Fitch Ratings last week downgraded $43 million of outstanding Canton School District general obligation debt to A-minus from A. The move reflects the district’s weak economy, declining population, lack of voter support for future debt, and competition from charter and community schools, analysts said.
Fitch assigned a stable outlook at the lower rating, recognizing recent improvements in the district’s financial and academic positions.
The district serves the city of Canton, which is located in northeast Ohio, an area that has been hit hard by the loss of manufacturing jobs across the region. A shrinking population contributes to its fiscal problems. Voters have rejected two recent proposals by the district to raise property taxes to support future operations, Fitch analyst Eric Espino noted in a report.
Though the district’s general fund balances have been negative for several years, its cash balances have recently improved due to reductions in expenditures, chiefly through the elimination of staff positions. In the last three years the school system has also overcome its reliance on deficit spending and managed to achieve small surpluses, though it still faces an accumulated deficit, Espino said.
In addition to local taxes, the district has received roughly 60% of its revenues since 2005 from the Ohio School Foundation Funding Program.