Massachusetts voters' rejection of charter school expansion is a credit positive for the commonwealth's urban local governments, said Moody's Investors Service.
"It will allow those cities and towns to maintain current financial operations without having to adjust to increased financial pressure from charter school funding," Moody's said Thursday.
On Nov. 8, 68% of voters rejected so-called Question 2, which would have authorized the commonwealth to allow up to 12 new charter schools or expansions annually.
According to Moody's, since the last charter school expansion in 2010, cities such as Boston (rated Aaa with a stable outlook), Fall River (A3 negative), Lawrence (A3 stable) and Springfield (A2 positive) have experienced significant growth in charter school assessments, averaging 83% due to increasing charter school enrollment.
"So far, the growing cost of charter schools on municipalities has not been a direct credit challenge; rather the effect is more indirect because Massachusetts school districts are integrated within cities and towns with relatively healthy credit profiles," said Moody's.
Education in the commonwealth is a primary budget item within a municipality's overall budget, which allows city budgets to absorb some of the education financial stress with other municipal sources. "This integration is a key distinction from school districts in other states that operate separately from the communities they serve," said Moody's.