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York City School District credit rating downgraded
A recent credit-rating report has ranked several Pennsylvania school districts — York City among them — amid the most financially dire in the country.
The report by Moody's Investor Service, titled "Small Group of Troubled Pennsylvania Schools Unlikely to Recover Soon," revealed York City School District along with seven others, had been downgraded to a junk bond rating category.
The report said "the outlook on ratings remains negative" for the city district.
Bond ratings indicate an organization's credit rating, and those classified as junk bond ratings will likely have low financial strength and a lack of ability to pay a bond's principal and interest in a timely fashion, according to Moody's.
"This is troubling news for school districts and for residents because when bond ratings are downgraded it drives up the costs when schools need to borrow money to repair or upgrade their facilities," state Auditor General Eugene DePasquale said in a press release. "Simply increasing funding is not enough. We need to stem the hemorrhaging of school district finances and look for long-term, systemic changes.
DePasquale listed districts' financial stresses which include tuition payments to charter schools, dwindling real estate tax bases, and the failure of the Department of Education to follow through on construction reimbursements.
DePasquale, to discern potential savings, reviewed audits of school districts and other school entities in 2014 and found $19 million that could've been saved, he said in the release.
School districts paid too much because of improper lease reimbursements to charter schools, excessive superintendent retirement buyouts and deficient contracts, employee leave payouts, errors reporting student enrollment and tuition waivers granted without proper approvals. School districts were also being over-charged for transportation services.
"With no significant reforms being seriously considered in the legislature to fix these huge problems, more and more Pennsylvania schools could very well slide off the financial cliff," DePasquale said in the release. "This is not about some investment rating, this is about keeping our schools open and educating our students. Pennsylvania's economy could be in peril if our education system crumbles. All options must be on the table."
— Reach Jessica Schladebeck at firstname.lastname@example.org