Moody's Investors Service said it has downgraded to Aa3 from Aa2 and to A1 from Aa3 the unlimited tax general obligation and limited tax general obligation bond ratings of Snohomish County School District 25 (Marysville), Wash., and assigned a negative outlook.

The district has $97 million of outstanding Moody's-rated general obligation debt.

The downgrade reflects the district's narrow financial position that has deteriorated in recent years. In 2011 the district drew down its general fund reserves from an already low 4.2% to an even lower 2.4%.

The rating also takes into account the district's large yet declining tax base, above average socioeconomic profile, as well as reserves and revenues that are dedicated to debt service on its limited tax general obligation debt.

The negative outlook reflects the challenges that the district may face in rebuilding reserves to a level that keeps pace with its rated peers.

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