NEW YORK - Moody's Investors Service said it has downgraded to A1 from Aa3 the rating on South Lake School District, Mich.'s general obligation unlimited tax pledge. The outlook on the district remains negative. The A1 rating and negative outlook apply to $9.4 million of outstanding rated general obligation tax debt.

The outstanding bonds are secured by the district's general obligation unlimited tax pledge. The downgrade to the A1 rating reflects the district's weakened financial position and limited general fund reserves; declining trends in student enrollment; moderately sized, depreciating tax base in the metro Detroit (GO rated B2/rating under review) region; and average debt burden.

The retention of the negative outlook reflects Moody's belief that the district's general fund position will continue to be challenged in the near term due to enrollment declines, uncertain state funding pressures, and current low levels of reserves.


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