S&P Global Ratings lowered its underlying rating on East Pennsboro Area School District (ASD) Pa.'s general obligation (GO) debt outstanding to 'A' from 'A+'. The outlook is negative. We base the downgrade on increased charter school expenditures leading to imbalanced operations and weakened reserves. The negative outlook reflects our view of the district's budgeted deficits and continued reserve declines despite efforts to maintain balanced operations. East Pennsboro ASD's full-faith-and-credit pledge secures the bonds, subject to limitations established by Act 1. Under Pennsylvania commonwealth statute, the Act 1 Index restricts a district's ability to raise the tax levy higher than a certain index, which the Pennsylvania Department of Education determines. Despite these limitations, we rate the limited-tax GO debt at the
