Lisa Lambert of Reuters writes about a report issued by Fitch Ratings. From the Fitch report:
As has been the case in past times of financial strain, states are rethinking the size, cost, and role of their governments as they develop solutions to budgetary shortfalls. In many cases, this process has resulted in decreased local government funding. The extent to which local governments will feel the impact of these actions varies based on how dependent they are on state funding.
As such, Fitch Ratings believes school districts and counties will experience the greatest funding reductions. This report addresses the relationship between state and local government issuer ratings and discusses some of the main ways in which state actions can affect local government finances.
Lambert hones in on school districts and counties:
Fitch Ratings said in a report on Friday that school districts and counties will face their greatest funding reductions from states.
It said cuts in aid can result in “intergovernmental downloading,” where the financial burden for a service is shifted from a higher level of government to a lower level.