Moody's Investors Service said it has downgraded to Baa3 from Aa3 the rating on Canyon County School District #131 (Nampa), Idaho's $130.5 million of outstanding general obligation debt.
The rating carries a negative outlook.
The downgrade is reflective of the severe fiscal stress placed on the district as a result of budgeting and accounting errors and the lack of management response to addressing budget issues.
These errors required a correction to the district's fiscal 2012 general fund balance, which is now negative. Given its history of very low general fund reserves, the district was not well positioned to absorb the impact that the errors had on its fund balance, and it has yet to adopt a plan to correct the deep deficit.
Moody's does not believe that the state of Idaho will step in to provide assistance. The negative outlook reflects uncertainty surrounding the district's approach to closing its structural deficit, and the ongoing fiscal stress the district will likely have as a result of the negative fund balance and very narrow liquidity.