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LANSING, Mich. (AP) — Moody's Investors Service has downgraded the credit ratings of more than three dozen Michigan school districts this year.
Falling revenue and rising costs are behind the downgrades at the 43 districts, The Detroit News reported (http://bit.ly/1Jw2RqU ) Monday.
Credit downgrades can raise the cost of borrowing money.
Among the districts receiving downgrades are Detroit Schools, Lenawee County's Morenci Area Schools and Oakland County's Farmington Schools.
"Michigan school districts don't have revenue-raising flexibility and many are losing enrollment, which has a direct impact on revenues," said David Jacobson, a spokesman for Moody's Investors Service.
Michigan law prohibits districts from raising property taxes for operating funds over 18 mills on non-homestead properties.
Many districts have cut spending, laid off teachers and other staff and gotten rid of some school programs.
At Morenci Area Schools, enrollment has dropped by about 120 students over the past five years. General fund revenue is projected at about $6.4 million for the upcoming academic year. It started the year with a general fund balance of just over $285,000.
The credit downgrade reflects the district's declining enrollment and static state funding, Morenci Superintendent Mike McAran said.
Detroit Public Schools has been under the auspices of a state emergency manager for several years and has about $483 million in debt. The district's enrollment was once well above 100,000 students, but now is about 47,000.
Former state superintendent of Public Instruction Mike Flanagan wrote earlier this year in a report to education appropriation subcommittees as he was leaving his post that cash needs could force Detroit Schools to refinance even more debt.
Only Oakland County's Oak Park Schools saw a credit rating upgrade from Moody's. Enrollment is up by about 3,400 students over the past five years. The district also has a $2.6 million general fund after seeing a $5.5 million deficit three years ago.
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Information from: The Detroit News, http://detnews.com/
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