ROCHESTER, N.Y. (WROC) — Back in September, Rochester Mayor Lovely Warren warned that the Rochester City School’s Districts budget deficit could have a negative impact on the city’s bond rating.
Tuesday, Rochester’s debt rating took a hit because of the district’s fiscal crisis.
Moody’s Investors Service has downgraded the city of Rochester’s debt rating, and revised the city’s outlook as “negative.”
The downgrade, according to Moody’s, is because of RCSD’s fiscal crisis.
“The downgrade to A2 reflects the significant decline in reserves and liquidity at the City School District, which is a component unit of the City The decline in reserves, which is well in excess of what management projected during our discussion in July of this year, is the result of poor budgeting of teacher salaries, benefits, transportation costs and costs associated with charter schools,” the report said.
City of Rochester Communications Director Justin Roj released a statement on the financial report, saying in part:
“Moody’s action is exactly what the Mayor and others warned about for months. The failings of the school board have led to this day of reckoning for our entire community, its taxpayers and, most importantly, our children.
This credit downgrade shows that the fiscal well-being of the City and the school district are completely and fundamentally tied. Now, the school board must take action to finally address their mismanagement of city schools. And, as the distinguished educator’s report made clear, it’s not a matter of money, it’s a matter of management.
Moody’s stated the City’s overall financial health is strong and we will continue our historically sound management and budget practices to maintain this position. We will also continue to work with the Superintendent, and our other governmental partners, on behalf of the children of Rochester.”
According to Moody’s, Rochester can recover from this downgrade.
Factors that could lead to upgrade:
- Ability to close the budget gap in 2020
- Structurally balanced financial operations based on recurring revenues in fiscal 2021 and 2022
Factors that could lead to downgrade
- Inability to close budget gap in 2020 (all ratings)
- Structurally imbalanced financial operations at either the BOE or City over the next several fiscal years (all ratings)
- Decline in liquidity (BAN & RAN)
- Further declines in long-term credit profile (BAN & RAN)