Santa Ana USD, Calif., 2002B GOs Downgraded to A-Plus by Fitch

Fitch Ratings said it has downgraded Santa Ana Unified School District, Calif.'s $47 million general obligation bonds (election of 1999) 2002B to A-plus from AA.

The rating outlook has been revised to negative from stable.

The bonds are secured by an unlimited property tax on all taxable property within the district.

The downgrade reflects the district's delayed implementation of planned expenditure reductions, resulting in a very large operating deficit that is expected to lower the district's fiscal year end 2014 financial cushion to the legally-required minimum of 2% from 18% in fiscal 2011.

The negative outlook reflects Fitch's concern that the district will be challenged to solve its operating deficit given limited remaining expenditure flexibility, questionable willingness from stakeholders to implement potentially drastic reductions over a short time period, and rising benefit costs.

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