* Agency has negative outlook on district
* Rating could be lowered if district's finances weaken
SAN FRANCISCO, Sept 6 Standard & Poor's Ratings
Services cut its underlying rating on Thursday on the Inglewood
Unified School District by two notches to BBB-minus due to
uncertainty over the California district's finances and warned
of further potential downgrades.
S&P in a statement said it has a negative outlook on the Los
Angeles-area school district as it may fail to tackle a budget
gap and may not accept a bail-out from California's government.
"We could lower the rating if the district's finances were
to weaken because of insufficient liquidity for operations,"
said S&P credit analyst Lisa Schroeer.
"We, however, could revise the outlook to stable if the
district were able to adjust its finances and place itself on a
path toward achieving long-term structural balance and
sufficient liquidity," Schroeer said in the statement.
California lawmakers approved a bill last week that would
allow Inglewood's school district to borrow up to $55 million
from state-guaranteed funds. The loans would be repaid over 20
years. By accepting the money, the state superintendent of
public instruction would appoint an administrator to assume
control of the school district.
The statement noted S&P assumes state funds for school
districts will be tight as the rating agency expects voters will
reject a measure on California's November ballot seeking to
increase the state's sales tax and income tax rates on wealthy
Governor Jerry Brown is campaigning for the measure. Its tax
increases would raise revenue to prevent planned cuts to
education spending over the near term and to bolster
California's budget in coming years.