Moody's Investors Service said it downgraded to A2 from A1 the rating on Crane Elementary School District, Ariz.'s general obligation bonds outstanding in the approximate amount of $14.7 million and assigns a negative outlook.

The ad valorem bonds are secured by the district's unlimited property tax pledge.

The downgrade primarily reflects the district's structurally unbalanced financial operations, very narrow liquidity, and its pressured local economy evidenced by an exceptionally high unemployment rate, weak wealth indices and prolonged property value declines.

The negative outlook reflects Moody's view that the district will remain challenged in balancing financial operations due to its above average reliance on uneven state funding which will likely result in further reliance on the county for liquidity needs and weak available reserve levels on a GAAP basis.

The GO rating continues to reflect the strength of the voter-approved, unlimited property tax pledge securing the bonds and the established levy and collection history for the debt service levy. The county rather than the district levies, collects, and disburses the district's property taxes, including the portion constitutionally restricted to debt service on general obligation bonds. This supports the credit quality of these bonds despite weak finances.

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