LOS ANGELES — Moody's Investors Service downgraded a San Francisco area school district's bonds one notch and assigned a negative outlook, impacting $105 million of existing general obligation debt and the anticipated pricing of $220 million in GOs on June 22.

Hayward Unified School District plans to price the bonds in two series, a $124.7 million refunding and $95 million in new money GOs, according to the June 10 Moody's report.

"The downgrade to A3 from A2 reflects a material, negative deviation in the district's financial performance relative to expectations incorporated in our most recent review," Moody's analysts wrote. "We now expect available liquidity and reserves to decline to very narrow levels at the end of fiscal year 2015, which would reduce reserves to multi-year lows and further weaken the district's already limited financial flexibility."

Standard & Poor's June 16 revised its outlook to negative from stable while affirming Hayward Unified's A-plus rating.

"The negative outlook reflects our view of the district's third consecutive year of operating deficits, resulting in projected available fund balance of less than 2% at the end of fiscal 2015," said Standard & Poor's credit analyst Jaime Trejo.

The Moody's negative outlook reflects what it sees as very narrow finances; an inability on the part of the district to correct financial imbalances; and the risk that actual spending may vary negatively from the budget, as it has in recent years.

The district occupies approximately 61 square miles in Alameda County and educates about 22,500 students in 22 elementary schools, five middle schools, three comprehensive high schools and one continuation high school.

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