Prescott Unified School District credit rating downgraded
PRESCOTT – Moody’s Investor Service downgraded Prescott Unified School District’s credit rating in anticipation of an upcoming bond sale.
The March 29 announcement from Moody’s gives the school district an A1 rating is a downgrade from PUSD’s previous AA2 rating.
Moody’s decision comes on the heels of a similar credit analysis from Standard & Poor’s, which gave the district an A rating, a downgrade from the school district’s previous AA-minus rating.
“That’s probably happening in most districts in Arizona,” Superintendent Joe Howard said, noting bond ratings are based principally on the long-term outlook of school districts.
He said the district received the credit reviews in preparation for an upcoming bond sale. In April, the district will sell an anticipated $7.5 million in general obligation bonds – half the $15 million approved by voters in November.
“All districts are not able to keep the capital reserves they once were,” added Kevin Dickerson, the school district’s chief financial officer.
Howard said the downgrade was no surprise given trends in both enrollment and state funding formulas.
“We’re quite pleased to have maintained the things that make us great,” he said.
Several other schools around the state have seen downgrades in credit ratings in recent bond sales, including a downgrade of Mingus Union School District from A2 to A1 earlier in March.
Moody’s noted PUSD has a total of $2 million in outstanding debt prior to the bond sale.
“The downgrade to A1 reflects the district’s moderately-sized tax base that is in its second year of growth, a weakened financial position that we expect will be challenged to improve over the near term amid ongoing enrollment losses,” Moody’s wrote in its ratings action “The district also has a low debt burden with above average amortization and a manageable pension burden.”
Moody’s indicated continued financial strain and declines in enrollment could further weaken the district’s financial position. Conversely, economic growth in Prescott or changes in state funding that could result in credit upgrades when the district refinances its debt or sells the remaining bonds voters approved in November.