Moody's Investors Service has downgraded to A2 from A1 the general obligation rating on Cook County School District 123 (Oak Lawn — Hometown), Ill., and revised the outlook to negative.
The A2 rating and negative outlook applies to $11.2 million of outstanding Moody's-rated GO debt.
The district has an additional $21.8 million in GO debt which is not rated by Moody's.
Debt service on the bonds is secured by the district's general obligation unlimited taxing authority. The downgrade reflects a significant drop in valuation in the most recent assessment year and a lack of general fund reserves due to a prolonged imbalance between revenues and expenditures.
The A2 rating also reflects the district's favorable location in the Chicago (GO rated Aa3/rating under review for possible downgrade) metropolitan area; alternate liquidity in the district's working cash fund, which was generated through the issuance of working cash bonds; and manageable debt burden.
The negative outlook signals Moody's expectation that the district's financial position will deteriorate further in the coming years due to limited revenue raising ability and potential increases in fixed costs related to possible statewide pension legislation.
