Log in
Lost password
Become a member for free
Sign up
Sign up
Dynamic quotes 

4-Traders Homepage  >  Shares  >  Nyse  >  Moody's Corporation    MCO

News SummaryMost relevantAll newsSector news 
The feature you requested does not exist. However, we suggest the following feature:

Moody : Credit Rating Downgrades Play Into Debate On Budget

08/02/2015 | 04:34pm US/Eastern

HARRISBURG - Downgrades to Pennsylvania's credit rating during the past several years due to higher public pension costs and reliance on one-time revenue sources are a key issue in the current stalemate over the state budget.

Gov. Tom Wolf has said those downgrades ,which make government borrowing more expensive, cost state taxpayers $170 million a year.

Now, state Auditor General Eugene DePasquale has put a spotlight on how eight school districts, including Mid Valley School District in Lackawanna County, have a junk bond rating.

Moody's Investors Service has issued a report saying these districts have been downgraded since March to the junk bond rating category, a Baa rating or lower.

Mid Valley's credit rating was downgraded several notches from A3 negative to Baa3 negative on July 1.

The other districts are McKeesport Area, East Allegheny, West Mifflin Area and Penn Hills, all in Allegheny County; York City School District, Frazier School District in Fayette County and Trinity Area in Washington County,

Moody's attributes the downgrades for the overall group to higher pension costs for school employees and several other factors.

"A fiscal cocktail of rising pension obligations, delayed state reimbursement for capital projects, competition from charter schools, and a failure to raise property taxes will continued to push districts into distress," the Moody's report said.

Moody's said these districts are unlikely to see a fiscal recovery anytime soon since required pension contributions for all school districts will increase while the state owes all Pennsylvania school districts more than $1 billion for capital projects.

DePasquale said the credit downgrades hurt taxpayers in these districts.

"This is troubling news for school districts and residents because when bond ratings are downgraded it drives up the costs when schools need to borrow money to repair or upgrade their facilities," he added.

The auditor general has highlighted the need for revamping the charter school system and identified general areas where savings can be obtained, such as curbing excessive retirement buyouts for school superintendents and better accounting for student enrollment figures and payments for transportation.

"As we find so often in our audits, many school districts face a variety of financial pressures, including tuition payments to charter schools, dwindling real estate taxes and the failure of the Department of Education to follow through in construction reimbursements," DePasquale said .

Wolf's proposal for a 7 percent increase in basic education subsidies and a 10 percent restoration in previous cuts in state aid for charter school reimbursement would help school districts, but faces hurdles in the budget battle, Moody's said.

House Republican lawmakers are pushing a plan to overhaul the school construction reimbursement process and borrow money to pay schools still awaiting state reimbursement for construction projects.

(Robert Swift is Harrisburg bureau chief for Times-Shamrock Communications newspapers. Email rswift@timesshamrock.com.)

(c) 2015 ProQuest Information and Learning Company; All Rights Reserved., source Newspapers

React to this article
08/02 MOODY : Credit Rating Downgrades Play Into Debate On Budget
08/02 MOODY : Lebanese banks weighed down by weak economy, Syria conflict
08/02 MOODY : Lebanon's weak environment to weigh on banks
08/02 MOODY : Credit downgrades weigh on budget talks
08/02 MOODY : County backtracking on Moody zoning plans
07/31 MOODY : The Week in Public Finance: Pensions, Hedge Fund Sneakiness and Retirees
07/31 MOODY : assigns Aa2 to Davis School District, UT's GO Refunding Bonds, Ser. 2015..
07/31 MOODY : assigns negative outlook to Tucson USD No 1, AZ's bonds; affirms Aa2 (Ra..
07/31 MOODY : assigns A2 to Rowan University, NJ's $58M Ser. 2015C; outlook negative (..
07/31 MOODY : China Aoyuan's domestic bond issuance credit positive
Duration : Period :
Moody's Corporation Technical Analysis Chart | MCO | US6153691059 | 4-Traders
Income Statement Evolution
More Financials