Standard & Poor's Ratings Services said it has revised its outlook to negative from stable and affirmed its BBB-minus long-term rating and underlying rating on Chester County Industrial Development Authority, Pa.'s series 2004A bonds issued for Collegium Charter School.

Standard & Poor's also assigned its BBB-minus long-term rating and negative outlook to the authority's series 2012 revenue bonds issued for the school.

"We based the outlook revision on our assessment of the school's limited balance sheet strength as well as a need to demonstrate a continued trend of positive operations and improving cash balances commensurate with the rating category," said Standard & Poor's credit analyst, Sharon Gigante. "We based the rating on our view of the school's strong market fundamentals including strong historical enrollment growth, which has contributed to an overall improved financial position, and very good academic performance," said Gigante.

According to Standard & Poor's, a reduction of per pupil funding and large capital expenditures have limited Collegium's ability to generate strong operating margins. Standard & Poor's views the school's leverage as high, with pro forma maximum annual debt service (MADS) carrying charges, including leases, at more than 20% of operating expenses.

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