LOS ANGELES — Moody's Investors Service downgraded the general obligation bonds of a Pico Rivera, Calif. school district to A2 from A1 and gave the district a negative outlook affecting $69 million in debt.

The downgrade of El Rancho Unified School District's bonds resulted from the Los Angeles area district's extremely limited and downward trending general fund balance brought on by four consecutive operational deficits, Moody's analysts said.

The rating also incorporates the district's narrow liquidity, average socioeconomic profile, growing tax base and manageable debt burden, according to the report.

It also takes into account the strength of the voter-approved, unlimited property tax pledge that secures the debt service levy. Also taken into consideration is the secure nature of debt collection in which the county levies, collects, and disburses the district's property taxes, including the portion restricted for general obligation debt service.

The negative outlook reflects near term budgets and projections for the next three fiscal years, which indicate that the district will remain structurally imbalanced absent successful implementation of the district's restructuring plan.

The strengths include new district management that is committed to fiscal restructuring, steady full value growth, and manageable debt burden.

The challenges are declining enrollment, extremely limited liquidity with heavy reliance on short term borrowing, large draws on reserves that weaken the financial cushion and an elevated pension burden.

General fund balance improvement, sustained operational stability through reduced expenditures and significant assessed valuation growth could bump the rating up.

Further deterioration of the general fund balance and cash, continued reliance on short term financing and increased debt burden could push the rating down.

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