Issue: Bond Anticipation Notes, Series 2012; Rating: MIG 1; Sale Amount: $35,000,000; Expected Sale Date: 11/30/2012; Rating Description: Note: Bond Anticipation

Opinion

Moody's Investors Service has assigned a MIG 1 rating to Utica City School District's (NY) $35 million general obligation bond anticipation notes, Series 2012. Concurrently, Moody's maintains underlying Baa1 rating and negative outlook on $39.1 million long term general obligation (GO) debt. Proceeds from the notes will provide new money financing for reconstruction and improvements to existing school district facilities.

SUMMARY RATING RATIONALE

The MIG 1 short-term rating reflects the district's satisfactory long-term credit profile and favorable history of market access, signifying the district's ability to refinance the notes at their November 29,2013 maturity. The district's Baa1 long-term underlying GO rating reflects an adequate financial position, large urban tax base marked by below-average socioeconomic indicators, and elevated debt burden made more manageable by the district's high level of state building aid. The negative outlook reflects the possibility of significant declines in liquidity during the near term, the result of two consecutive years of large General Fund appropriations and the expectation of non replenishment.

The MIG 1 rating also reflects the district's ability to support long-term bond issuance under the New York school district intercept program contained in Section 99-B of the State Finance law which authorizes the state to withhold future allotments of state aid in order to make bond payments in the event of default by the school district. While the program does not ensure avoidance of a pending default or guarantee immediate repayments, we believe it does enhance the potential for recovery upon default and that the cure period is likely to be short.

STRENGTHS

Moderately sized tax base, which is expected to benefit overtime from the city's economic redevelopment initiatives

Sufficient market access.

CHALLENGES

Significant reliance on declining state revenues

Narrow net cash position

Limited financial flexibility

Below average socio economic profile characterized by very low wealth levels

High debt burden

WHAT COULD MAKE THE RATING CHANGE UP(REMOVAL OF NEGATIVE OUTLOOK)

-Significant tax base growth

-Ability to replenish appropriations and increase reserve levels

-Improved cash position

-Decreased debt burden

WHAT COULD MAKE THE RATING CHANGE DOWN

-Continued deterioration of reserves

-Increased reliance on cash flow borrowing

-Declines in tax base

-Further escalation of debt burden

RATING METHODOLOGY

The methodologies used in this rating were General Obligation Bonds Issued by U.S. Local Governments published in October 2009, and Bond Anticipation Notes and Other Short-Term Capital Financings published in May 2007. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

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For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

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Tiphany J. Lee Associate Analyst Public Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Edward Damutz VP - Senior Credit Officer Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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