DALLAS -- Moody's Investors Service downgraded to A2 from Aa3 the underlying rating for Pueblo County School District 70 in southern Colorado, and retained a negative outlook.
The downgrade applies to $100 million of outstanding debt.
"The A2 underlying rating is primarily based on the district's deteriorating financial performance including declining reserve levels," analyst Ryan Hazelett wrote in the June 2 report.
"The negative outlook reflects very limited financial flexibility and expected continuation of stressed financial operations leading to further declines in reserves for at least the next two years," he added.
The district serves about 53,100 residents in most of Pueblo County, not including the city of Pueblo. Enrollment in fiscal 2010 fell by 1% from the prior year. In fiscal 2012, enrollment increased 1.6% from fiscal 2011 to a total of 9,117 students.
Standard & Poor's last rated the district A-plus with a stable outlook on Jan. 22, 2013.
District voters defeated a $35 million bond proposal on Nov. 1, 2011. The proposal was designed to help pay for capital improvement projects in the district such as building a multipurpose facility, making security improvements as needed and outdoor education facilities.