LOS ANGELES — Moody’s Investors Service downgraded the Washoe County, Nevada school district’s bonds a notch to A1 ahead of a $255 million sale, citing weakening finances resulting from an ongoing structural deficit.
The outlook is stable on the upcoming sale and $496.8 million in outstanding bonds rated by Moody’s.
The district plans to price $55 million in Series 2017D limited tax general obligation school refunding bonds for savings and $200 million in limited tax Series C GOs for school building construction.
State legislators and district officials have been working since June to cover a shortfall that could result in $70 million to $80 million in cuts and possible layoffs.
The downgrade affects $496.8 million of outstanding debt.
The downgrade also reflects Moody's expectation that the district's budget will continue to be pressured in the near to medium terms.
The stable outlook reflects Moody's belief that the district will address its budgetary pressure and stabilize its financial profile at a satisfactory level, as soon as fiscal 2019, even with high fixed costs.
“We also expect the local economy and tax base to continue positive trends,” analysts wrote.
The 2017C Bonds are secured by the full faith and credit of the district within the constitutional and statutory limitations for overlapping operating and debt service levies plus additionally pledged revenues of a 0.54% sales and use tax.
The 2017D Bonds are secured solely by the full faith and credit of the district within the constitutional and statutory limitations of the district's operating and debt service levies.
The proceeds of the 2017C bonds will primarily be used to construct new schools, while the proceeds from the refunding bonds will be used to refund Series 2009B, 2010A, 2011A and 2011B General Obligation (limited tax) bonds for savings.