Duluth School District’s Bond Rating Downgraded

Moody's Investors Service Issued a BA1 Rating, Which Could Mean Higher Interest Rates for the District

DULUTH, Minn. – The credit rating of the Duluth School District has been downgraded by Moody’s Investors Service.

Moody’s issued the Duluth School District a BA1 rating for some bonds they will soon sell.

That rating is in the “Not Prime” category and could mean the district will payer higher interest rates.

The district requested the review from Moody’s because they will soon be selling more than $4 million in bonds to pay for renovations to the Rockridge School building. That building will become the home of The Hills Residential School.

District officials attribute the credit downgrade to a decline in their general fund, which they say is mainly because of a decrease in state funding.

“We do not believe that this will stand in the way of us selling the bonds that we are planning to sell,” said Doug Hasler, Chief Financial Officer of the Duluth School District. “It may factor in, it’s likely to factor in to some increased rate of interest that would be part of that bond issue.”

Duluth School Board member Harry Welty told us he doesn’t believe borrowing more money is the answer and that the school district needs to ask the public for a property tax increase to get out of their budget situation.

“It’s a rare school district that has to pay lenders with the teachers that teach their children and that’s functionally what the Duluth School District has been forced to do in recent years,” said Welty.

School district officials say they have no plans to issue more debt in the future. They say they will talk about how the credit downgrade will affect the district’s budget at their November school board meeting. That meeting will be on November 21st.

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