Charter school vote may hurt credit ratings, Moody’s warns Boston, 3 other cities - The Boston Globe:
Charter school vote may hurt ratings, credit agency says
The credit-rating agency Moody’s Investors Service is warning Boston and three other Massachusetts cities that passage of a ballot measure to expand charter schools could weaken the municipalities’ financial standing and ultimately threaten their bond ratings.
In e-mails sent Monday, Nicholas Lehman, an assistant vice president at Moody’s, warned that passage of the referendum would be “credit negative” for the cities.
“Depending on the Nov. 8 vote, the general credit view is the following: A vote of ‘No’ is credit positive for urban cities. A vote of ‘Yes’ is credit negative for urban cities,” Lehman wrote.
Lehman told the cities he would provide a draft analysis of the referendum’s impact on Wednesday and solicit their comment, publishing a full report after the election.
It was not clear Tuesday what has Moody’s concerned. But opponents of the ballot measure have stressed that city-run, traditional public schools can lose education aid as students migrate to charters.
Eileen O’Connor, a spokeswoman for the pro-charter “Yes on 2” campaign, said it would be irresponsible to comment on the Moody’s analysis before it was released. But she pointed to studies by the nonpartisan Massachusetts Taxpayers Foundation, among others, showing that “public charter schools have had zero negative impact
on district school finances.” She noted that
these studies, unlike the forthcoming Moody’s analysis, can be “downloaded and viewed in their entirety.”
Opponents of the charter school measure immediately seized on the Moody’s e-mail, saying it reinforced their concerns that city finances could be undercut if voters approve an expansion of charter schools.
“This is not us running an unfiscally sound city,’’ said Boston Mayor Martin J. Walsh. “It is not because of any decision by us and the City Council. It is a ballot decision that could potentially give the city a detrimental downgrade.”
Mayor Daniel Rivera of Lawrence, whose city also received the Moody’s e-mail, called it “worrisome.’’
“An independent rating agency tells you there is going to be a substantive impact, you have to listen,” said Rivera, who opposes the question.
The mayors of the two other cities who got the Moody’s e-mail, Springfield and Fall River, could not be reached for comment late Tuesday.
Moody’s municipal ratings are important for cities and towns when they float bonds to finance operations or pay for capital expenditures. When bond ratings are downgraded, it costs more for the governments to borrow money. Boston’s current credit rating from Moody’s is Aaa, the highest possible.
