Schools in Phila., dozens of towns face ratings cuts, higher costs if Pa. budget drags on (Update)

State-funded public schools and senior agencies face higher funding costs due to Pennsylvania elected officials' failure to settle on a budget. Moody's Investors Services warns it is preparing to downgrade the following debt:

- On Friday, Standard & Poor's Ratings Services said it plans to cut bond ratings for Philadelphia, Bristol, Chester Upland, Coatesville, Morrisville and dozens of other struggling Pennsylvania school districts and community colleges unless the state's budget "impasse" between Gov. Wolf and Republican leaders is resolved with a new tax and spending plan by November. (See full list of districts below.)

S&P is evaluating the dozens of school system now rated A+ or A on the strength of the state "intercept" program, which guarantees bondholders who fund school projects and borrowing will collect their regular payments, even if schools have to cut programs. S&P says the lack of a budget makes it "uncertain" that Pennsylvania will give schools enough aid to pay what they owe, analyst John Sugden told clients in a report.

- On Thursday, Moody's placed $49.6 million in debt owed by Chester Upland School District through the Pennsylvania State Public School Building Authority "under review for possible downgrade" due to "the uncertainty of critical state funding" and "delay in the state's budget adoption." Moody's says the state finances 80 percent of total spending in the district, which includes some of Delaware County's poorest neighborhoods. (S&P is also weighing the school-building authority for a possible downgrade.)

Moody's possible downgrade for the Chester system "follows rapid deterioration of the district's financial position over the past several years" and this year, "leading to a sizeable accumulated deficit," analyst Kristina Vaccaro wrote in a report to Moody's clients.

- On Wednesday, Moody's warned that it is considering a "multi-notch" credit downgrading for Philadelphia Corporation for Aging (PCA) bonds, currently rated Baa2, issued through the Philadelphia Authority for Industrial Development. PCA corporation says it feeds around 500,000 meals a year to seniors, and funds homecare for 13,000, among other services.

Moody's says the state provides two-thirds of PCA's $98 mililon annual budget, and that PCA has had to use scarce cash "to support the delay in state funding." This newspaper wrote about Moody's review of PCA's rating in print editions of today's Inquirer.

"Intercept" districts that face an S&P downgrade without a budget fix: Aliquippa, Allegheny, Allentown, Bell Vernon, Bentworth, Bethlehem, Bristol, Brownsville, Carbon County Vo/Tech, Catasauqua, Charleroi, Chester Upland, Clearvield Career/Tech, Coatesville, Crawford Career/Tech, East Allegheney, Erie City, Farrell, Frazier, Greensburg, Greenville, Harrisburg, Harrisburg Community College, Hazleton, Hollidaysburg, Homer City, Jim Thorpe, Greater Johnstown, Lackawanna County Career/Tech, Ligonier Valley, McKeesport, Midland Boro, Mid-Valley, Monesson, Monroe County Vo/Tech, Morrisville, North East, Northern Lebanon, Old Forge, Panther Valley, Penn Cambria, Penn Hills, the Pennsylania State Public School Building Authority, Plum Boro, reading, Riverside, Scranton, Sharpsville, Shenandoah, St. Clair, Steel Valley, Sto-Rox,  Trinity, Tunkhannock, Venango Tech.