Jul 28, 2015 2 min read

Trinity Area School District is among eight districts statewide to be downgraded to a “junk bond rating category,” according to a news release from the state auditor general’s office.

Trinity dropped from an A1 rating to a Baa rating following a report from Moody’s Investors Service, a credit rating service. David Roussos, director of fiscal services at Trinity, said the downgrade “stems from the district’s refinancing in April.”

“This came about in the spring as a part of our restructuring of finances,” Roussos said. “It comes as no surprise. It reflects a period where we saw the fund balance decrease. It came when we were at the bottom of a hole and working our way out.”

Trinity was the only district in Washington County to be downgraded. The report found Pennsylvania is home to 20 percent of the nation’s schools in the worst financial condition.

“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,” Auditor General Eugene DePasquale said. “Simply increasing funding is not enough. We need to stem the hemorrhaging of school district finances and look for long-term, systemic changes.”

Roussos said the rating is “still good,” as it only determines the district’s likelihood of repaying a loan.

“Instead of ‘very, very confident’ (that we will pay it back), we are at ‘feels very confident,'” he said.

It is not believed the downgrade will hurt the district, Roussos said.

“We are not in dire straits, but we do have to be careful,” he said. “We’ve been able to reassess what we need to do to fix our financial situation, and we are well on our way to doing so.”

Trinity was forced to cut programs and raise taxes over the last two years to combat growing expenses and a shrinking fund balance. In April, Trinity Area School Board unanimously approved restructuring $21 million of long-term bond debt to help alleviate its precarious financial condition. The move extended bond payments through 2032, an additional nine years.