“Pennsylvania school districts now make up 20 percent of the agency’s junk bond ratings,” according to the Pittsburgh Tribune Review.

Last week, Moody’s, the nation’s leading credit rating agency, downgraded to junk status the credit ratings of three school districts in western Pennsylvania- McKeesport, East Allegheny and Penn Hills. They join Philadelphia, Chester, York and Harrisburg and other districts that Moody’s says are “unlikely to recover soon.” Bad credit ratings mean districts will have to pay more to borrow money to operate their schools.

MOODY’S HITS THE NAIL ON THE HEAD
In the last four years school funding has been driven by politics rather than need.  Moody’s says “Pennsylvania’s public school funding is more subject to year-to-year decision-making than most other states. No formula or requirement governs how much the state appropriates for basic education funding; it is an annual decision made by the legislature. This can make it more difficult for districts to budget and prepare for state aid, which does not necessarily follow need but rather follows the legislature’s political will to fund education.”

ENDING THE CREDIT CRISIS
To repair the poor credit of poorer school districts, Moody’s points out that Governor Wolf’s proposed 7% increase in basic education funding would be “positive.”