Moody's Investors Service said it has downgraded to Aa3 from Aa2 the underlying rating on Tipp City Exempted Village School District, Ohio's general obligation pledge.

The Aa3 rating applies to $15.5 million of outstanding rated general obligation debt.

The outstanding general obligation rated bonds are secured by the district's general obligation unlimited tax pledge. The downgrade to the Aa3 rating reflects the district's narrow general fund reserve levels, which are expected to remain acutely pressured through fiscal 2013.

Also incorporated in the rating action is the district's moderately-sized, residential tax base near Dayton (GOLT rated Aa2/STA); its above average socioeconomic characteristics; the district's generally positive history of voter support for local operating levies, despite a levy failure in August 2012; the financial flexibility afforded the district's administration as there are no employee bargaining groups within the district; and its average debt profile with average principal amortization.

Going forward the district will likely need voter support in the next calendar year to begin to rebuild reserves and relieve the downward pressure on the district's credit profile which has resulted in the rating action.

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