South Lyon Community Schools given downgraded bond rating

South Lyon Community Schools given downgraded bond rating

Moody’s Investor Service has assigned South Lyon Community Schools a negative outlook.

In it’s March 21st analysis, the New York-based bond credit rating agency gave South Lyon schools an Aa3 rating with a negative outlook, noting that “the district’s financial position will narrow in fiscal 2023, based on a planned use of fund balance included in the budget and will be low compared to peers in the rating category. Additionally, the fixed costs are elevated and the district has additional capital needs in the future.”

Craig Thiel is the research director for the Citizens Research Council of Michigan and told The Detroit News that the downgrade is at least partly the byproduct of affluent districts receiving less money than others in COVID school relief funds.

“COVID dollars build up savings (for districts). The ones who have to eat up savings are the ones who didn’t get as much COVID money, like Grosse Pointe and South Lyon, and have to eat into their savings. They didn’t have the safety valve of COVID dollars,” he said.

Moody’s noted that South Lyon’s economic strengths of “very strong resident income levels, strengthening full value per capita and stable enrollment trend” are balanced against a financial position that is “narrow compared to peers in the rating category and the district’s elevated long-term liability ratio and high fixed-cost ratio.”

Factors that the agency said could lead to a datings upgrade include a restoration of reserves back in line with rated peers.

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