Moody’s Investors Service downgraded the Schenectady City School District, N.Y.’s general obligation debt to A2 from A1 on Tuesday.
The district has $74 million in GO debt.
Recent state aid cuts have weakened the district’s financial position, Moody’s analyst Joshua Levine wrote. State aid for the district dropped from 2009 to 2010 and has remained below 2009 levels ever since.
The district had lower property tax receipts in 2012 compared to 2011 due to a decline in property values. It chose not to address this decline with higher rates.
In 2012 Schenectady city government chose not to transfer $3.5 million in property tax revenue owed to the district, due to the city government’s own financial problems. While the city government did give this money to the district in May, Levine cited this history as a negative credit factor for the district.
The district’s median per capita income is only 72% of the United States median per capita income, Levine noted.
However, at $2.4 billion the district’s tax base is large compared to similarly rated school districts.
Moody’s expects the district’s debt burden to remain manageable. Also on a positive note, the state covers between 85% and 96% of the district’s outstanding indebtedness.
The district has a population of about 66,000 and is about five miles northwest of Albany.