Fitch Ratings said in a report Monday that it has downgraded the San Francisco Community College District’s general obligation bonds to A from AA due concerns about its accreditation.
The ratings change affects $28 million of 2002 general obligation debt, which like most of the district’s bonds are GO bonds backed by the city’s tax pledge.
“The downgrade reflects Fitch’s concerns over financial management raised in a recent letter to the district from the state accrediting commission for community and junior colleges,” the rating agency said.
Fitch also put the district on watch for a further downgrade, which it said is due to concerns over whether it can address the 14 fiscal, management and planning recommendations by the accreditation commission, some dating back more than five years, while keeping its accreditation.
After several evaluations, the Accrediting Commission for Community and Junior Colleges has placed the college district on “show cause,” which is the last probationary term before loss of accreditation. The district is required to submit a plan to address the commission’s concerns by Oct. 15 and a full report by March.
“A loss of accreditation would likely cause a downgrade due to the disruption of state and federal funding and risk of closure, at least temporarily,” Fitch said.