Moody's Investors Service said it downgraded La Habra City School District, Calif.'s outstanding long-term general obligation debt of $18.6 million to Aa3 from Aa2.
The downgrade of the district reflects the ongoing operating deficits, declines in the fund balance levels projected to be 8.6% of revenues in fiscal 2014 and the projected narrowing of liquidity to 1.8% of revenues in fiscal 2014.
The rating also incorporates the district's sizeable tax base which has grown 2.7% since 2012 as well as a debt and pension burden that are low relative to similarly rated California school districts.
The GO rating also reflects the strength of the voter-approved, unlimited property tax pledge securing the bonds and the well-established levy and collection history for the debt service levy.
This supports the credit quality of these bonds, somewhat offsetting the risk of any future financial weakness. The county rather than the district levies, collects, and disburses the district's property taxes, including the portion constitutionally restricted to debt service on general obligation bonds.
