Moody's Investors Service Monday downgraded to A2 from A1 its underlying rating on Jackson Public Schools, Mich., ahead of a planned refunding of $11.2 million of general obligation bonds.

The agency maintains an Aa2 enhanced rating on the refunding bonds, reflecting the additional security provided by the state's School Bond Qualification and Loan Program.

The ratings agency revised its outlook to stable from negative at the lower rating. The downgrade affects $51.5 million of outstanding GO bonds.

"The downgrade to A2 reflects district's narrow reserve levels coupled with a declining enrollment trend, a sizable tax base with significant valuation declines, a below average demographic profile, and manageable debt burden," Moody's said in a release on the downgrade. On the bright side, the district enjoys a solid tax base and its managers have shown a willingness to implement cuts, analysts said.

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