Lancaster County schools, South Carolina, outlook lowered to negative

S&P Global Ratings lowered the outlook on Lancaster County School District, South Carolina, to negative from stable Friday, citing two years of draws on reserves.

S&P affirmed the school district's general obligation bonds' AA-minus rating and its installment purchase revenue bonds' A-plus rating. The district had $184.6 million in net direct debt outstanding sometime this fiscal year, according to S&P.

The district drew on its reserves in fiscal 2024 and 2025, S&P noted. The rating agency said it expected the district to have roughly even revenues and expenditures in fiscal 2026, but that it would keep a sharp eye on the actual outcome. State aid has been unpredictable and the district is trying to improve its forecasting of this aid, S&P said.

The district benefits from being close to the Charlotte, North Carolina, metropolitan area, S&P said. Partly because of this, assessed values in the county have increased 84% since fiscal 2016. Despite the reserve draws, the county is still in compliance with its policy of maintaining a reserve equal to or above 12% of general fund expenditures.

"Debt and liabilities are manageable, with a moderate debt burden and elevated fixed costs," S&P said. "South Carolina contributes significantly to the district's pension and other post-employment benefit costs, limiting budgetary pressures from these expenditures."

S&P said the local economy is stable and income levels are generally in line with county and national averages.

Moody's Ratings rates the district's GO bonds Aa3 and its installment purchase revenue bonds A1 but has no outlook on the ratings.

The school district didn't immediately respond to a request for a comment.