Moody's Investors Service said it has downgraded to Baa1 from A1 the rating on Morenci Area School District, Mich.'s outstanding general obligation unlimited tax bonds.

The Baa1 rating applies to $11.3 million in outstanding debt, secured by the district's general obligation unlimited tax pledge.

The downgrade to the Baa1 rating reflects the district's considerably narrowed general fund reserves coupled with a continuous trend of enrollment declines that negatively affects the collection of operating revenues.

Also incorporated in the rating is the district's modestly sized tax base, below average socioeconomic indices, and its elevated debt profile with below average principal amortization.

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