Moody's Investors Service said it has downgraded the Philadelphia School District, Pa., to Ba3 from Ba2, affecting $3.2 billion of general obligation debt.
The outlook is negative. Moody's affirmed the A1 enhanced ratings on all the district's GO bonds. This action concludes a review for possible downgrade that Moody's initiated on June 6, 2014.
The district's bonds are secured by its general obligation unlimited tax pledge.
The downgrade to Ba3 from Ba2 reflects the district's ongoing struggles to continue delivering its core services. As the district has continued to lose enrollment to charter schools and cut its programming, its ability to deliver core services has weakened.
The district has very little authority to increase its revenues, which has pressured the quality of its educational services as well as its financial position as charter school costs have increased.
