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Moody's Downgrades Bedford Central's Bond Rating Over Reserves

Bedford Central's school board, pictured, will face what to do with reserves.
Bedford Central's school board, pictured, will face what to do with reserves. Photo Credit: Tom Auchterlonie

BEDFORD, N.Y. -- Moody's Investors Service recently announced that it downgraded the Bedford Central School District's bond rating on long-term debt, citing its use for reserves for budget balancing.

Moody's announced that the district's rating has been lowered from Aa1 to Aa2. The downgrade covers $46 million in outstanding bonds, Moody's said.

The rating also has a negative outlook for the district's debt.

"The negative outlook reflects management's plan to continue to use reserves to balance the budget through fiscal 2017," Moody's announcement states. "Full use of reserves over this time will result in diminished financial flexibility putting pressure on the long-term rating."

The school district plans to wean itself off of using reserves by the 2017-18 budget.

Meanwhile, Moody's assigned a rating of MIG 1 for short-term debt, known as bond anticipation notes, or BANs.

Moody's downgrade announcement is available here.

In a questions-and-answers sheet posted on the district's website, responses are given to the downgrade.

"It was not a surprise but a disappointment," a statement notes about the downgrade. "Our multi-year budget plan includes a number of efforts to maintain valued programs and get budgets structurally balanced by the end of fiscal year 2017-2018."

The district also note that its objectives for using reserves, known as fund balance, differ from Moody's focus, which is towards investors.

"We have to balance other concerns the rating agencies do not measure," the district adds. "Financial decisions have to be balanced with citizen expectations for keeping taxes low, complying with unfunded mandates and the effects of the recession on the State, and most importantly, retaining the academic and activity programs our parents and community expect."

The district's response can be read here.

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