Moody's Investors Service said it has downgraded to A3 from A1 the underlying rating on Northern Local School District, Ohio 's general obligation debt outstanding.

The A3 rating applies to $3.8 million in outstanding rated GOULT debt and $1.6 million in outstanding rated GOLT tax anticipation note debt.

Rated bonds are secured by the district's general obligation unlimited tax pledge. The rated notes are secured by an irrevocable pledge of the district's continuing 4.2 mill permanent improvement levy approved by voters in May 1999.

The tax anticipation notes carry the same rating as the district's GOULT debt, despite the limited pledge, due to the dedicated levy and the projected satisfactory annual debt service coverage through the final maturity in 2020.

The downgrade to the A3 rating reflects the district's very narrow general fund cash reserves which continue to be pressured by revenue losses associated with low property tax collection rates. Also incorporated in the rating is the district's moderately-sized rural tax base in central Ohio (GO rated Aa1/stable outlook); below average socioeconomic characteristics; and modest debt profile with rapid principal amortization.

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