Standard & Poor's Ratings Services said it lowered its school issuer credit rating on North Gibson School Corp., Ind., to A-plus from AA-minus.

At the same time, it affirmed its AA-plus long-term rating on North Gibson Multi School Building Corp. bonds, issued for North Gibson School Corp., reflecting the school corporation's eligibility for, and participation in the Indiana State Aid Intercept Program. The strength and availability of state aid to intercept program participants support the program's credit characteristics.

"The downgrade reflects our view that the district's reduced reserve levels, though mostly for capital-related purposes as opposed to imbalanced operations, are no longer commensurate with a AA-minus rating," said Standard & Poor's credit analyst Anna Uboytseva.

The school ICR reflects the school corporation's: participation in the Evansville, Ind. metropolitan area economy; stable local economy that is somewhat reliant on the auto manufacturing industry; very strong market value per capita levels; and ability to maintain strong cash reserve levels that nevertheless weakened during the last four years.

Somewhat limiting credit factors include the district's adequate income levels, limited revenue-raising flexibility, and moderate debt burden.

The stable outlook on the long-term rating reflects the strength of the Indiana State Aid Intercept structure. The stable outlook on the school ICR reflects the district's strong reserves on a cash basis of accounting.

S&P does not anticipate changing the rating during the two-year outlook horizon, as it believes the district will continue to maintain at least good cash reserves across both the general and the rainy day funds despite limited revenue-raising flexibility. The significant drop in reserves could negatively pressure the rating. The district's access to the larger Evansville metropolitan area supports the outlook.

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