DALLAS -- Fitzgerald Public School District in Macomb County, Michigan lost the investment grade rating on its limited tax general obligation bonds in a downgrade that put its unlimited tax GOs at the lowest rung of investment grade.
Moody's Investors Service downgraded the district's ULTGO rating one notch to Baa3 and its LTGO rating a notch to Ba1. Both carry a negative outlook. The limited tax bonds are secured by property tax revenues from a sinking fund that is authorized through 2020.
The downgrades impact $21.5 million of unlimited tax bonds and $1.9 million of limited tax GOs.
The district has suffered a precipitous drop in student enrollment over the years that has strained its operating revenue and impacted its reserves and operating reserves, Moody's said in its report.
Enrollment for fiscal 2016 totaled 2,618 students and the district's population was estimated at 16,565 as of 2014.
Friday's downgrades also cite the district's high debt burden and exposure to the underfunded status of the Michigan Public School Employees Retirement System.
Moody's said it expects that "the district's reserves will remain narrow through fiscal 2016 and may narrow further due to the district's limited operating flexibility."
Fitzgerald Public School District provides kindergarten through twelfth grade education to residents of a portion of the City of Warren and other communities adjacent to the city of Detroit.
The district covers 4.4 square miles and is located entirely within Warren city limits. The district operates two elementary schools, one middle school, and one high school.