OREANDA-NEWS. S&P Global Ratings has lowered its rating on Cook County School District No. 156 (Lincoln), Ill.'s existing limited school bonds payable under the debt service extension base (DSEB) to 'A' from 'A+'. At the same time, we assigned our 'A' long-term rating to the district's series 2016B and C general obligation (GO) limited school bonds. The outlook on all ratings is stable.

"The lowered rating on the district's existing limited bonds reflects the new debt structure in which the limited bonds' debt service on the series 2016B and C and all existing limited bonds exceeds the current base in one or more years," explained S&P Global Ratings credit analyst Andrew Truckenmiller.

The limited school bonds are GOs payable by a debt service levy under the DSEB, which is limited as to amount but unlimited as to rate. We rate the bonds one notch lower than an unlimited-tax GO pledge because the debt service for the bonds and for other limited GO bonds exceeds the current DSEB in one or more years, and we do not assume any future DSEB growth. Since there is a possibility that the entity will need to pay debt service from non-tax available funds, we therefore consider the series 2016B and C bonds and all outstanding limited bonds to be general fund obligations.

Proceeds of the series 2016B and C bonds will be used to pay and redeem the district's outstanding GO series 2016A bonds, which were issued to fund various capital improvements for the district's Lincoln Elementary School building.

Cook County School District No. 156 provides pre-K-8 education to about 6,692 residents of Calumet City, approximately 15 miles south of downtown Chicago in southern Cook County.

Enrollment has steadily declined from 1,088 in school year 2011-2012 to 1,010 in school year 2014-2015. However, school year 2015-2016 saw a 1.2% increase to 1,022.

"The stable outlook reflects our view that the district will likely maintain its very strong level of reserves over the two-year outlook period," added Mr. Truckenmiller. Additional rating stability is provided by the district's participation in the deep and diverse Chicago metropolitan area and expected stable enrollment trends.

We could consider a higher rating if the district's current economic characteristics improved, specifically an improvement in equalized assessed value and wealth and income indicators. Conversely, we could consider a lower rating if the district were to draw down reserves substantially to levels we no longer consider at least strong.