The extra state aid flowing to California's school districts this year after a half decade of cutbacks is a "credit positive," Moody's Investor Service said Friday, while cautioning school officials against overspending the new money.
"The liquidity of all school districts will improve as the budget reduces payment deferrals and thereby improves the timeliness of aid payments," the credit rating house said in its weekly bulletin. "However, the credit positive budget measures are not a panacea because some school districts will continue to be challenged by expense pressures and growing pension costs."
It notes that under the school finance plan championed by Gov. Jerry Brown and adopted by the Legislature, all districts will receive more money, but those with large numbers of poor, English-learner students will receive markedly more.
"The added funding, which is an important credit factor, could enhance these districts' credit profiles," Moody's says. "Nonetheless, effective management and budgeting of the funding enhancements will shape their longer term credit profile."
PHOTO: Gov. Jerry Brown signs the state budget during a ceremony at the Capitol, Thursday, June 27, 2013, in Sacramento. The Sacramento Bee/Lezlie Sterling