Moody’s, one of three major credit rating agencies, has dropped Portsmouth High School’s (PHS) underlying rating from an A2 rating to a Baa2, from outstanding general obligation debt.
The downgrade wasn’t major, but it brought the school district out from a rating that stated it is“a high quality and very low credit risk, with best ability to repay short-term debt,” to a rating that states it is “a medium grade, with some speculative elements and moderate credit risk, with high ability or acceptable ability to repay short-term debt.”
According to a press release issued by Moody’s, “The Baa2 rating reflects the district’s weakened financial position tied to a trend of operating deficits, as well as challenges to materially improving reserves going forward. Also included in the rating are the district’s manageable debt profile with rapid repayment, modest but stable tax base, and exposure to unfunded pension liabilities of cost-sharing retirement plans.”
Moody’s claimed that the rating could rise through trends of operating surpluses leading to improvements in the district’s reserve position, or by the strengthening of the district’s tax base and/or socioeconomic profile.
Moody’s also claimed the rating could drop further if the district witnesses structural imbalance leading to further decline in reserves, or through a growth in the district’s debt and/or pension burden.
Portsmouth City School District Superintendent Scott Dutey said that the rating is in reference to their bond issue and would impact the school if officials attempted an additional bond levy in the future. Dutey went on to explain that the problem isn’t only in the school, but it is a problem many organizations and governments face
“There are numerous financial challenges facing not only our district, but our city and region,” Dutey said. “We are always working to put our district in a more positive financial position in moving forward.”
Reach Joseph Pratt at 740-353-3101, ext. 1932, or by Twitter @JosephPratt03