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Orono finance committee reports Moody's downgrade to Aa3 tied to fund-balance levels; board outlines plan to rebuild reserves
Summary
The board's finance and facilities committee reported a recent Moody's downgrade from Aa2 to Aa3 attributed to lower fund reserves that fell during COVID. Committee members said the change will have a modest effect on interest costs and outlined steps to restore reserves.
The Orono Public School District's finance and facilities committee told the board Dec. 9 that Moody's Investor Service downgraded the district's rating from Aa2 to Aa3, citing lower fund reserves.
"We did get downgraded recently from a Aa2 to a Aa3," the finance committee chair reported, adding the downgrade was tied to the district's fund-balance level falling below the historic target. The committee noted local revenues and reserves were strained during the COVID period and that Moody's expects fund reserves above about 15 percent.
Committee members called the downgrade a modest "ding" that will likely affect interest costs by a small number of basis points; they emphasized they already have a strategy and have shown improvement toward rebuilding the fund balance. The committee is prioritizing facilities needs, assessing which projects are most critical, and considering funding sources so as not to over-burden future boards.
The board asked administration to present a more detailed facilities priorities update in January, and finance staff said they will continue to report on progress restoring reserves.
Board members thanked committee members and staff for the work on stewardship and emphasized the district's need to balance capital needs with reserve rebuilding.
