Seven California School Districts Get Negative Ratings From Credit Firm

Seven California school districts received a negative financial outlook rating from the Fitch Group, a national credit rating agency, the San Diego Union-Tribune reported January 20.

The school districts are in San Diego, San Francisco, Sacramento, Los Angeles, Ross Valley and Redwood City.

One district that received the downgrade, Sweetwater Union High School District in San Diego, is currently being audited by the state for potential financial fraud. The district originally received a downgrade in October 2018 after it was found to have been significantly underestimating its expenditures and overestimating revenue.

The district has been actively spending its reserves rather than cut spending to meet its minimum financial obligations.

“It’s very unusual for local governments in the U.S. to have budget deficits when the economy is growing,” Andrew Ward, director at Fitch Group in San Francisco, said. “And the fact that, rather than saving, they’re running through their reserves right now is a concern that prompted the negative outlook.”

There are approximately 1,037 school districts in California, according to the state Department of Education.

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