NEW YORK - Moody's Investors Service said it has downgraded the rating to Baa1 from A1 on Northern Ozaukee School District, Wis.'s $5.5 million of general obligation unlimited tax debt. Moody's has also assigned a negative outlook at the lower rating level.

The downgrade of the general obligation rating to Baa1 from A1 reflects the district's significantly weakened financial position that has narrowed as a result of multi-year structural imbalances.

The district's overall financial flexibility has become severely limited as a result of narrow cash balances and a reliance on short term cash flow borrowing to fund operations.

The Baa1 rating additionally reflects the enterprise risk associated with the Wisconsin Virtual Charter school (WVL), whereby continued declines in charter school enrollments may pressure the district's operating revenues in the absence of new operating revenues or a multi-year cost reduction plan.


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