Moody's Investors Service said it has downgraded to Aa2 from Aa1 the rating on McLean County School District 87's (Bloomington, Ill.) general obligation bonds.
Concurrently, Moody's assigns a Aa2 rating to the district's $9.9 million general obligation school bonds, Series 2014 and $9.9 million general obligation school bonds, Series 2015. The bonds are secured by the district's general obligation unlimited tax pledge, which provides for a dedicated property tax levy that is unlimited as to rate or amount for repayment of the bonds.
Proceeds of the Series 2014 bonds will currently refund the district's Series 2004 bonds for expected net present value savings, as well as health and life safety capital projects across the district. The Series 2015 bonds will also fund health and life safety capital projects.
The Aa2 rating reflects the district's weakening financial position following two years of operating deficits and the need to use annual transfers from the working cash fund for operating expenditures; levying at the rate cap for key operating property tax levies, limiting future revenue raising flexibility; healthy tax base with moderate valuation reductions but bolstered by significant institutional presence; and a manageable debt burden that may increase if the state shifts its pension funding burden back to districts.
