OREANDA-NEWS. S&P Global Ratings revised its outlook to negative from stable and affirmed its 'BBB+' underlying rating on Muncie School Building Corp., Ind.'s series 2015A first mortgage refunding bonds, issued for Muncie Community Schools. At the same time, we affirmed our 'AA+' long-term and underlying (SPUR) ratings, with a stable outlook, on the district's previously issued bonds that qualify for Indiana's State Aid Intercept program. The strength and availability of state aid to intercept program participants supports the program's credit characteristics.

"The outlook revision reflects our view that there is a one-in–three chance that the district's finances could weaken over the next two years," said S&P Global Ratings credit analyst Anna Uboytseva. "We believe finances could be further pressured if enrollment declines accelerate or if management fails to adjust the budget as expected." We believe that management's plan to address the district's budget gap is structurally sound, however, the recurring deficit is substantial and there could be implementation risk associated with the plan. If the corporation were to significantly increase its reliance on external and internal short-term borrowing and or if it experiences another general fund deficit in 2016, we could lower the rating in the next two years.

The school district is located in Delaware County in east-central Indiana, approximately 60 miles northeast of Indianapolis.