Moody's Investors Service said it has downgraded to A2 from A1 to Jasper County School District, S.C.'s outstanding $19.3 million bonds, which are secured by the district's general obligation unlimited ad valorem tax pledge.

Moody's has assigned an A2 underlying rating and a negative outlook and a Aa1 enhanced rating and a stable outlook to the district's $16.9 million general obligation refunding bonds, Series 2013.

Proceeds from this issue will be used to refinance a portion of the district's general obligation bonds, Series 2004 and Series 2005 for an expected net present value savings of $1.7 million, or approximately 9.3% of refunded principal, with no extension of maturity and the bulk of savings taken upfront.

The downgrade to A2 reflects weak financial management practices over the past several years, which have significantly narrowed the district's fund balance reserves and liquidity. The rating also reflects the district's moderately sized tax base, socio-economic levels that fall well below state and national norms, limited fiscal autonomy, and manageable debt position.

The negative outlook demonstrates the sizeable pressures the new management team faces as they seek to rebuild the district's financial position following the considerable narrowing of reserve levels and liquidity below the minimum formal fund balance policy level. The outlook also considers significant, non-budgeted losses to enrollment, which have weakened state funding and further narrowed reserve levels, limiting the district's ability to offset potential future budget variations.

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