A lengthy budget impasse in Pennsylvania’s capital led Standard & Poor’s to withdraw its ratings for the commonwealth’s state aid intercept program for school districts and community colleges.

Standard & Poor's has discontinued its underlying rating for credit enhancement programs on rated Pennsylvania school districts.

S&P announced the policy change Tuesday afternoon as an additional step to its December withdrawal of ratings based on Pennsylvania's state aid intercept program for school districts and community colleges due to a lengthy budget impasse from lawmakers. The state aid intercept program ratings had been A or A-plus depending on bond provisions and were placed on credit watch negative in September.

"Following the withdrawal of our rating on the Pennsylvania credit enhancement program on Dec. 11, 2015, and our subsequent report indicating our expectation of the unlikelihood of the rating being reinstated, we have discontinued the underlying rating for credit programs on Pennsylvania school districts," said S&P in a statement announcing the decision.

Pennsylvania adopted its budget for the 2016 fiscal year that ends June 30 in mid-March, nine months behind schedule. S&P rates Pennsylvania general obligation bonds AA-minus with a negative outlook.

S&P's December withdrawal of ratings based on the Pennsylvania state aid intercept program affected 57 districts including Philadelphia, which had been rated A-plus prior to the move. Moody's Investors Service downgraded the Philadelphia School District's debt five notches in late December to Ba2 based on a new methodology to the Pennsylvania State Intercept Program. Fitch Ratings rates Pennsylvania's largest district with an enhanced rating of A-plus and an underlying rating of BB-minus.

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