CHICAGO — Moody's Investors Service downgraded McLean County School District Number 87 in Bloomington, Ill. one notch to Aa2 as it prepares to come to market with a $20 million new money and refunding issue.
The district's general obligation bonds were lowered to Aa2 from Aa1. Proceeds of the issue will current refund debt sold in 2004 for savings and fund health and life safety capital projects across the district.
Moody's said it lowered the rating due to the district's weakening financial position following two years of operating deficits and the need to use annual transfers from its working cash fund for operating expenditures.
The district has levied at the rate cap for key operating property tax levies, limiting future revenue raising flexibility. It enjoys a healthy tax base -- with moderate valuation reductions -- that is bolstered by significant institutional presence from Illinois State University and State Farm Insurance. It also has a manageable debt burden. The debt load could, however, rise if the state shifts its pension funding burden back to districts, Moody's said.