WASHINGTON, April 24 The across-the-board
federal spending cuts known as sequestration could have serious
financial consequences for 10 U.S. school districts in New
Mexico, Wisconsin, New York, Texas and California, Moody's
Investors Service said on Wednesday.
Local governments receive only 5 percent of their revenue
directly from the U.S. government, and school districts also
only get a sliver of their funding from federal programs,
Moody's said. On the whole, the rating agency expects local
governments' revenue declines to be limited from sequestration.
Still, the $85 billion in automatic cuts stretching from
last month through September will lead to $58 million in
reductions to "federal impact aid," which is provided to school
districts near Indian reservations, military bases and other
areas where property tax revenue is kept low by a federal
The cut is "a minimal amount in aggregate, but a material
amount for certain districts," Moody's said.
Those districts can mostly be found in New Mexico.
Federal impact aid provides 54 percent of the revenue of
Dulce Independent School District and 47 percent of
Gallup-McKinley County School District, both in New Mexico,
according to Moody's. The state's Bernalillo Municipal School
District, Pojoaque Valley School District and Grants Cibola
County School District all depend on the aid for 18 to 23
percent of revenue.
New Mexico as a whole is particularly vulnerable to
sequestration. Federal spending is 12.8 percent of the state's
gross domestic product, according to Pew Center on the States.
The Defense Department also is a major employer, and Moody's
warned in December that military cuts could put the state's
economy at risk. The agency rates the state highly, but has a
negative outlook on New Mexico's credit.
For Lac Du Flambeau School District, in Wisconsin, federal
impact aid is 27 percent of general fund revenue and for Indian
River Central School District in New York, it is 25 percent.
Texas has two school districts that will be affected -
Copperas Cove Independent School District, where aid is 23
percent of revenue, and Killeen Independent School District,
where it is 19 percent.
In California, Muroc Joint Unified School District relies on
the funds for 16 percent of revenue.