MUNCIE — S&P Global Ratings has lowered the rating on bonds issued by Muncie Community Schools in 2014 by four notches, from "BBB+" to "BB."
The downgrade reflects S&P's view of the school district's depleted reserves in key operating funds; long history of operating deficits; backlog of unpaid bills and inter-fund borrowing; very limited opportunities for growth in property tax revenue; declining enrollment; and low household incomes in Muncie.
The new ranking is further proof that "this is far and away the most pressing economic development problem in Muncie," Ball State University economist Michael Hicks told The Star Press. "Every economic dollar spent elsewhere is wasted as long as the local public schools are in crisis."
MCS is being transparent about the downgrade. The Star Press learned about it because it is on the agenda for the next school board meeting on Tuesday.
The lower bond rating could affect the school district's ability to borrow money to cover cash flow, according Hicks.