NEW YORK - Moody's Investors Service said it has downgraded to Aa3 from Aa2, the underlying rating for Fenton Area Public Schools, Mich.'s $46.2 million outstanding general obligation debt.

The downgrade of the general obligation debt to Aa3 from Aa2 reflects the district's narrowing financial position primarily driven by declines in enrollment coupled with increasing expenditures.

The district's utilization of reserves to balance budgets has strained financial operations which were further challenged in the current year following a cut in state funding.

The negative outlook reflects our expectation that financial operations will face continued stress in the near term and the district may have difficulty stabilizing and eventually rebuilding financial reserves.

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