Moody's Investors Service said it has downgraded Grundy County School District 54's (Morris, Ill.) general obligation rating to A2 from A1 and assigned a negative outlook.
Concurrently, Moody's assigns an A2 rating to the district's $1.9 million general obligation school bonds, Series 2013. The A2 rating and negative outlook apply to $21.9 million of post-sale general obligation debt.
The Series 2013 bonds are secured by the district's general obligation unlimited tax pledge. The bonds will be used to increase the district's working cash fund with the intent to transfer the proceeds over to the district's education fund to support operations.
The downgrade to the A2 rating is based on the district's declining operating reserves and limited financial flexibility with continued use of annual working cash borrowing to support operations.
Also incorporated in the A2 rating is the district's modestly-sized tax base; average socioeconomic characteristics; and elevated direct debt profile with below average principal amortization.
The negative outlook reflects the district's uncertain ability to maintain positive reserves in its general fund given revenue limitations and current financial projections which do not depict a specific plan to achieve long term financial stability.