Moody's Investors Service said it has downgraded to Baa1 from A2 the rating on Douglas & Champaign Counties CUSD 301 (Tuscola), Ill.'s general obligation unlimited tax debt. The outlook remains negative. The Baa1 rating and negative outlook applies to $5.4 million of outstanding rated general obligation debt.
The outstanding rated bonds are secured by the district's general obligation unlimited tax pledge.
The downgrade to the Baa1 rating reflects the district's severely weakened financial position following several years of general fund declines and regular use of reserves to support ongoing operations.
Also reflected in the Baa1 rating is the district's small tax base situated 25 miles south of Champaign (GO rated Aaa) in Douglas (A1) and Champaign (Aa2) counties; below average socioeconomic characteristics; and manageable debt profile with rapid principal amortization.
The negative outlook reflects Moody's expectation that the district's general fund position will continue to be challenged in the near term given the potential for further delays and anticipated cuts to state aid. Additionally, the district faces potential increases in pension costs based on pension reform that is likely to be implemented by the state of Illinois (A2/stable outlook).