The Standard & Poor’s credit ratings agency is warning that it could downgrade some of Pennsylvania’s school districts and community colleges because of the 2-month-old budget stalemate that’s cut off billions of dollars in aid.
Friday’s note from Standard & Poor’s said the stalemate creates uncertainty that the state government will be able to help cash-strapped school districts or colleges cover debt service payments.
Meanwhile, credit rating agency Moody’s says the immediate threat to holders of Pennsylvania bonds is minimal. Moody’s says the state is expected to make timely payments on general obligation debt and that it just made on-time installment payments on two series of lease revenue bonds.
Still, Moody’s says the state government’s chronically late budgets reflect poorly on governance. Pennsylvania’s credit rating is below-average among states.