Financial Update: Moody’s Adjusts District Credit Rating

Moody’s Ratings recently announced an adjustment to Duluth Public Schools’ credit rating, moving our issuer and general obligation debt rating from A3 to Baa2.

We recognize that news of a credit rating downgrade can be concerning. This shift primarily reflects recent financial challenges caused by rising operational expenses—specifically in special education and student transportation—that have outpaced our revenues over the past two fiscal years.

While our budget reserves have tightened significantly, Moody’s noted several core strengths that provide a strong foundation for recovery, including our steady student enrollment growth, Duluth’s strong local economic base, and a manageable debt level.

What We Are Doing The district is actively addressing these budget challenges through short-term liquidity management and long-term structural changes:

• Expenditure Reductions: We are implementing staff and operational cost adjustments for the 2026–2027 school year aimed at creating a balanced budget and generating a modest surplus.

• Community Input & Funding: The district plans to approach voters in November 2026 with two operating levy proposals to help restore long-term fiscal stability.

• Cash Flow Management: We will continue utilizing short-term cash flow borrowing as needed to maintain seamless day-to-day operations for our schools and students.

Our priority remains clear: protecting the quality of education, safety, and support services for our nearly 8,800 students while taking firm, transparent steps to rebuild our financial reserves.

We will continue to keep our community updated as budget plans for the upcoming school year are finalized.