Moody's Investors Service said it has downgraded to Ba3 from A3 the rating on Hampton County School District No. 2, S.C.'s outstanding general obligation debt.
The Ba3 rating affects $5.4 million in outstanding long-term debt secured by the district's general obligation unlimited property tax pledge. A negative outlook has been assigned.
The downgrade of the district's underlying rating to Ba3 reflects the district's deficit fund balance and liquidity position, attributable to several consecutive years of operational imbalance and failure to enact timely expenditure cuts to offset declining revenues.
The downgrade further factors in a reliance on the recent utilization of deficit financing and an emergency loan from Hampton County (A3) to cover delinquent cash-flow notes.
Additionally, the rating reflects sharply declining enrollment for what is already a small school district that has a limited tax base, below average socioeconomic characteristics, and above average direct debt burden with slow payout.
