NEW YORK - Moody's Investors Service said it downgrades to A2 from A1 the underlying rating on McHenry County School District Number 12, Ill.'s (Johnsburg) general obligation pledge. The A2 rating applies to $891,000 in outstanding rated general obligation debt.

The outstanding rated bonds are secured by the district's general obligation unlimited tax pledge.

The downgrade of the district's credit rating reflects the district's general fund deficit position, with ongoing reliance on its working cash fund and tax anticipation warrants to provide operational liquidity, and expectations that reserve levels will remain narrow in the near to medium term leaving the district's overall financial health susceptible to unforeseen negative budgetary variances.

Also incorporated is the district's moderately sized, residential tax base in McHenry County (GO rated Aaa); its above average socioeconomic characteristics; and its manageable debt profile with rapid principal amortization.

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