Unless the Philadelphia School District raises more than $200 million extra in a hurry, Moody's Investors Service warned it will cut the district's bond rating -- which is already down at Ba2, junk status, forcing the district to pay extra when it borrows money -- because the district's proposed $2.5 billion budget for the next fiscal year will "materially imperil its ability to provide students with an adequate education."



Without $216 million in additional funding, Moody's analyst Dan Seymour wrote in a report to clients, the district threatens to increase the average class size to 41 students and lay off more than 1,000 staff. " This is credit negative because a further deterioration in education services will likely result in additional student flight to charter schools and other alternatives," further reducing district revenues, Seymour added. 3 in 10 Philadelphia students already go to charter schools.