Moody's Investors Service said it has downgraded to A2 from A1 the underlying rating on Jackson Public Schools, Mich.'s general obligation debt and removed the negative outlook.

Moody's also has assigned an A2 underlying rating and a Aa2 enhanced rating with a stable outlook to the district's $11.2 million 2013 refunding bonds (unlimited tax general obligation).

Post-sale, the district will have an estimated $51.5 million in outstanding general obligation debt.

The 2013 refunding bonds are secured by the district's general obligation unlimited tax pledge without limitation as to rate or amount. Proceeds from the bonds will refund a portion of the school district's outstanding 2004 school building and site and refunding bonds.

The downgrade to A2 reflects district's narrow reserve levels coupled with a declining enrollment trend, a sizable tax base with significant valuation declines, a below average demographic profile, and manageable debt burden.

Removal of the negative outlook reflects the district's track record of making expenditure reductions in response to operating deficits and the expectation that the size of operating deficits will moderate over the near term.

The Aa2 enhanced rating and stable outlook is based on the additional security provided by the state's School Bond Qualification and Loan Program (QSBLF).

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