Moody’s Investors Service last week downgraded to Baa3 from Baa1 its rating on Michigan’s Mount Clemens Community School District.

The downgrade affects just under $60 million of unlimited-tax general obligation debt. The outlook is negative.

Located outside Detroit, the district suffers from below-average socioeconomic characteristics as well as annual operating deficits and elevated debt levels, Moody’s analysts said.

“The negative outlook on the district’s general obligation rating reflects our expectations that the district will continue to face state aid revenue and enrollment pressures in the near term,” Moody’s said in the downgrade report.

The district could see an upgrade if it is able to realize its deficit-elimination plan or if it sees an enrollment increase, but another downgrade could be on the horizon if it is unable to eliminate its general fund deficit or it continues to suffer declining enrollment.

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