Standard & Poor's has revised its outlook to negative from stable on Perry Public Schools, Mich. issuer credit rating of BBB-plus because of its ongoing fiscal challenges.

The district's bonds, however, carry the AA-minus rating due to its participation in the Michigan State School Loan Fund program.

"The outlook revision reflects the district becoming a deficit district as projected, projection of a continuing decrease in the fund balance in the current fiscal year, decreasing enrollment we view as difficult to allow for financial stability, and expenditure reduction assumptions we continue to consider difficult to achieve," said analyst Blake Yocom.

Analysts also said they consider the district's budgeted assumptions overly optimistic. The district benefits from strong incomes and strong market value per capita.

Due to its negative fund balance, the district is required to submit a deficit elimination plan with the state annually and provide periodic updates on the execution of the plan. Standard & Poor's views the additional state oversight, and potential for state intervention, as a positive credit factor. The district is located in central Michigan about 20 miles northeast of downtown Lansing.

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