Moody’s Investors Service is downgrading the credit ratings of 43 Michigan public school districts, including Lawrence Public Schools in Van Buren County. According to “The Detroit News,” falling revenue and rising costs are behind the downgrades. Lawrence went from A3 to Baa1 on July 28, which is down one spot in the risk chart that Moody’s uses to signify credit risk. The district is still above the level at which it’s considered too risky to be a guaranteed investment in Moody’s system of letters and numbers. The Detroit Public Schools have the state’s worst credit rating at Caa1, which is four steps above the worst credit rating issued.
Credit downgrades can raise the cost of borrowing money. Moody’s spokesman David Jacobson says Michigan school districts don’t have revenue-raising flexibility and many are losing enrollment, which has a direct impact on revenues. Michigan law prohibits districts from raising property taxes for operating funds over 18 mills on non-homestead properties.
