Moody's Investors Service said it has downgraded the Paynesville Independent School District No. 741, Minn.'s general obligation rating to A2 from A1.

The rating affects approximately $5.5 million of general obligation debt outstanding. The bonds are secured by the district's unlimited tax pledge.

The A2 rating reflects the district's challenged financial position evidenced by three consecutive years of operating deficits; limited cash position from state aid delays; a limited tax base of $748 million; declining enrollment; and an average debt profile with no near term borrowing planned.

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