The 'BBB' rating on Philadelphia, Pa.'s GO (serial) bonds series 2003A and multi-modal GO bonds (auction-rate securities) series 2003B-1 and B-2 reflects the following: The city's weakened financial condition, as operating deficits and accounting changes have depleted GAAP balances, although budgetary-basis balances at fiscal year-end 2003 totaled $91 million, or 3% of expenditures. A budgeted deficit for fiscal 2004, which, if realized, will reduce both the budgetary-basis and GAAP-basis balances to deficit position: negative $12 million and negative $110 million, respectively. Continued fiscal oversight provided by the Pennsylvania Intergovernmental Cooperation Authority (PICA). Continuing longstanding fiscal problems at the Philadelphia School District and Philadelphia Gas Works (PGW), which could cause the city operating stress. The city's location in the center of
