MOODY'S PLACES ON WATCHLIST FOR POSSIBLE DOWNGRADE CLEVELAND MUNICIPAL SCHOOL DISTRICT'S (OH) $160.9 MILLION OUTSTANDING RATED GO DEBT

Posted on: December 15, 2009, 5:57 pm

NEW YORK, Dec 15, 2009 -- Moody's Investors Service has placed Cleveland Municipal School District's (OH) Baa1 general obligation rating on Watchlist for possible downgrade, reflecting Moody's expectation that liquidity will narrow substantially in fiscal 2010 and that projected fiscal 2011 operating results remain uncertain, pending the district's forthcoming Transformation Plan. Current projections reflect a minimal cash balance of $41,000 at the close of fiscal 2010, or essentially 0% of projected revenues, followed by a sizable cash deficit totaling $52.8 million, or negative 8.8% of projected revenues, at the close of fiscal 2011. Near-term fiscal stability is dependent on a revenue enhancement and/or substantial expenditure reductions. Management has no plans to pursue revenue enhancement at this time and has indicated the projected operating shortfall for fiscal 2011 will be off-set by substantial expenditure reductions to be detailed in the district's Transformation Plan. Moody's expects the Transformation Plan, scheduled to be released in early January 2010, will provide clarity concerning the district's fiscal position moving forward. Future credit reviews will focus on the scope of the expenditure reductions detailed in the Transformation Plan and management's efforts to mitigate execution risk associated with this strategy. This rating action affects $160.9 million in outstanding rated general obligation debt. Moody's anticipates taking action on the Watchlist action within 90 days...

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