OAKLAND – Citing “weak management practices” and financial risks driven by declining enrollment, the bond rating firm Moody’s has downgraded the financial status of the Peralta Community College District to negative, a blow that comes as the district is dealing with both a budget shortfall and a large bond measure on the November ballot.
“The negative outlook reflects weakened financial performance in fiscal 2017 and uncertainty in improvement in fiscal 2018,” Moody’s said in a statement. The district is also threatened by slowed future growth,” accounting errors and what was described as a sizable amount of debt with variable interest rates.
Moody’s had last rated the district’s outlook as stable.
The district is racing to find $7.3 million in budget cuts across its four campuses by September to fill a budget shortfall blamed on falling enrollment. Discretionary spending is being slashed, vacant positions are not being filled and a 1.5% raise given to all employees last year is being rolled back.
District Chancellor Jowel Laguerre was not immediately available to discuss the Moody’s downgrade Thursday.
Earlier this month district trustees voted to place both an $800 million bond measure and parcel tax extension on the November ballot. The $800 million in borrowing would be spent to replace seismically unsafe buildings, construct new buildings improve classrooms and for other projects. It was not immediately clear how the Moody’s downgrade would effect the ballot measure.
Trustees also voted to ask voters in November to extend a 2012 parcel tax that will expire in 2020.
The parcel tax measure was met with resistance before it passed. “I have deep concerns over the fiscal management of this district,” Trustee Nicky Gonzalez Yuen said before the vote. Discussions over its finances often devolve into “deep suspicion and conflict,” he said.
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