The credit quality of Iowa school districts is not expected to suffer as they deal with mid-year state aid cuts, Moody’s Investors Service said last week in a special report.

The ratings should remain stable as the districts benefit from significant state oversight that limits growth in operational expenditures, along with their own substantial flexibility in raising revenues, and stable property tax values that generate reliable revenue collections.

Iowa has generally weathered the recession better than neighboring states. However, a drop in revenues that resulted in an estimated $400 million shortfall in fiscal 2010 resulted in a 10% reduction in state funding levels to school districts as well as public higher education ­institutions.

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