Moody's Investor's Service said it downgrades Berea City School District, Ohio's general obligation bond rating from Aa3 to A1 and its certificates of participation from A1 to A2.
The bonds are secured by the district's general obligation unlimited tax pledge.
The A1 rating reflects the district's narrow cash position and GAAP-basis fund balance, mixed levy history, sizable tax base located near Cleveland (A1/stable outlook), and manageable debt profile.
The certificates are secured by the district's pledge to make annual lease rental payments which are subject to annual appropriation.
The A2 rating reflects the appropriation risk associated with the rental payments, the essentiality of the financed project which bondholders have a leasehold interest in secured by a ground lease, the satisfactory legal provisions contained in the lease terms as well as the overall credit quality reflected in the long-term rating.