Moody’s Investors Service said it has downgraded the general obligation rating of the Enlarged Ogdensburg City, N.Y., School District to Baa2 from Baa1, affecting $5.3 million in outstanding debt secured by the district’s unlimited-tax general obligation pledge.
The downgrade is based on the district’s narrow general fund balance and net cash position, coupled with weak financial controls, analysts said. The outlook is negative, reflecting the potential for continued pressure on the district due to rising pension costs and dependence on state aid.
Moody’s said that the Baa2 rating incorporates the district’s modest but growing tax base and below-average wealth levels due in part to the presence of two state correctional facilities in the Baa1-rated city of Ogdensburg.
The rating also takes into account the district’s manageable debt burden and rapid amortization, with 97.4% of outstanding debt maturing in 10 years, according to analysts. All of the school district’s debt is fixed rate and the district is not party to any derivative agreements.
While the district has generated sufficient revenue to meet ongoing operations since fiscal 2006, Moody’s said the general fund balance remains narrow at $2 million, representing 6.9% of revenues as of fiscal 2008, which is well below the median of 17.4% for similarly rated districts.