Moody's Investors Service has downgraded to Baa2 from Baa1 the rating on Fitzgerald Public School District, Mich.'s outstanding general obligation unlimited tax bonds.

Concurrently, Moody's has downgraded to Baa3 from Baa2 the rating on the district's outstanding general obligation limited tax debt. The negative outlook on the district has been removed. The Baa2 and Baa3 ratings apply to $31.2 and $3.8 million in outstanding GOULT and GOLT debt, respectively.

Outstanding rated GOULT bonds are secured by the district's general obligation unlimited tax pledge, as authorized by voters. Outstanding Series 2004 school building and site bonds are secured by the district's general obligation limited tax pledge, though debt service payments are expected to continue to be serviced by proceeds from the district's 3.5 mill sinking fund levy, which was renewed by voters in November 2010 and does not expire until 2025.

The rating downgrades reflect the district's very weak financial position and trend of operational imbalance. Also incorporated in the ratings are the district's recently stabilized student enrollment; modestly-sized tax base experiencing significant valuation declines; and elevated debt profile with above average principal amortization.

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