Standard & Poor's Ratings Services said it revised its outlook to negative from stable on Johnson County School District No. 55 (Vienna), Ill.'s series 2009 general obligation alternate revenue source bonds.

"The negative outlook reflects a slowly declining operating reserve position," said Standard & Poor's credit analyst John Sauter, "and while management expects the declines to moderate beginning in fiscal 2014, uncertainty remains regarding how far reserves will decline before the budget is stabilized."

The agency also affirmed its A-plus long-term rating on the series 2009 bonds, reflecting: good financial management practices; general fund reserves (measured on a cash basis of accounting) that remain strong, despite recent declines; and moderate debt burden with no future debt plans.

The district's limited local employment opportunities and below-average economic metrics are limiting credit factors, as is uncertainty regarding the future state of state aid funding, the district's major source of revenue.

Securing the series 2009 bonds are taxes, grants, state aid, interest earnings, and other revenues received by the district, in addition to an ad valorem property tax pledge. The district levies property taxes each year to cover principal and interest on the bonds, but abates them to the extent that pledged revenues are expected to be available to pay debt service. While sufficient funds are not required to be on hand before the tax abatement, the district has historically maintained adequate cash balances on debt service due dates, providing comfort against a potential delay of pledged revenue receipts.

The school district provides Pre-K through eighth grade educational services to an estimated 5,075 residents in southern Illinois' Johnson County. The district encompasses approximately 88 square miles, including the city of Vienna (Johnson Count seat) and unincorporated areas.

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