Fitch Ratings last week downgraded Lincoln Park School District’s underlying rating to BBB-plus from A and revised its outlook to negative from stable.
The move affects $28 million of unlimited tax general obligation bonds issued by the suburban Detroit school district.
“The downgrade reflects Fitch’s concern about the district’s ability and willingness to reduce spending in line with revenue constraints,” analysts said. “This concern arises from significant deficit spending in each of the last three audited years, reducing the general fund balance to low levels at the end of fiscal 2011.”
The negative outlook reflects analysts’ expectations that the district will continue to face pressure and limited flexibility to deal with state aid cuts and rising costs.
The enhanced rating of the bonds, based on the State of Michigan School Bond Loan Fund Program, is AA-minus with a positive outlook. The district is located in Wayne County, about 12 miles outside Detroit.