Moody's Investors Service said it downgraded Heath City School District, Ohio, to A1 from Aa3 affecting $12.2 million of general obligation debt.
Concurrently, the outlook has been revised to negative.
The district's bonds are secured by the district's general obligation unlimited tax pledge.
The downgrade reflects the district's decline in cash reserves and narrow financial position which is expected to remain pressured over the near to medium term.
The rating also incorporates the district's moderately-sized tax base in central Ohio (Aa1/stable outlook) with some taxpayer concentration, somewhat below average socioeconomic profile, dependence on voter-approved levies for operating revenue, declining enrollment, and manageable debt burden.
The negative outlook reflects the expectation that the district's finances will continue to be narrow, absent material near-term revenue enhancement or expenditure reduction.