LOS ANGELES — A Nevada school district's general obligation bond limited tax rating was downgraded to Baa2 by Moody's Investors Service, which retained a negative outlook.
Moody's downgraded White Pine County School District's underlying GOLT rating to Baa2 from A3 Thursday.
The rating action affects $8.6 million in debt.
Moody's also maintains a Aaa enhanced rating of the district's rated GOLT debt outstanding from its participation in the Nevada School District Bond Guarantee Program.
"The downgrade reflects continued weakening in the district's financial performance and sustained draws on reserves that have left the district with narrow levels of liquidity," Moody's analysts wrote.
If the district does not experience revenue growth, reduce expenditures, or experience a significant increase in its tax base through economic growth, Moody's said, it will be challenging for the district to improve its financial performance and reserve position.
The tax base has experienced two years of declines and is not expected to improve given the high concentration of taxpayers in the somewhat volatile industries of mining and wind energy generation, according to the report. The district's concentrated, rural economy and tax base remain under pressure.
The negative outlook reflects Moody's expectation that the district's financial position will continue to deteriorate in the near term.
The factors that could lead to an upgrade or removal of the negative outlook are surpluses that bring reserves to stable levels to align with higher-rated peers; or growth in the tax base and further diversification of the major taxpayers and local economy.
Factors that could lead to a downgrade include a continued structural deficit or further weakness in the tax base and economy.
The GOLT bonds are secured by the full faith and credit of the district within the constitutional and statutory limitations of the district's operating and debt service levies and the aggregate rate of overlapping levies. The district share a common boundary with White Pine County, Nevada, which borders Utah and is located 242 miles north of Las Vegas, 241 miles from Salt Lake City, and 320 miles from Reno. The district has a population of 10,043, and encompasses approximately 8,941 square miles. The district serves approximately 1,203 students, as of the 2015 school year, and operates seven schools.