CHICAGO — Macon & Dewitt Counties' Community Unit School District 2 in Central Illinois is at risk of losing its investment-grade rating because of its fiscal struggles.
Moody's Investors Service last week lowered the district's general obligation rating two notches to Baa3 from Baa1 and said the outlook remains negative.
The action applies to $22.6 million of outstanding debt. The downgrade stems from the "district's negative general fund position, with continuing reliance on its working cash fund to provide operational liquidity, and our expectation that general fund and working cash fund reserves will remain extremely pressured in the near term," Moody's said.
The district serves an area in central Illinois with a moderately-sized tax base in Maroa-Forsyth near Decatur.
The district has elevated debt levels but benefits from above average wealth levels.
The negative outlook reflects analysts' concerns over the district's ability to deal with its structural imbalance without the use of working cash bonds as state statutes require the district retire its outstanding working cash bonds before new issues.