Update: Last week's debt-rating cut by Moody's won't affect services or financing for Philadelphia Corporation for the Aging: The downgrade only affects fixed-rate bonds previously issued for the agency's 642 N. Broad St. headquarters, and the agency has no intention of borrowing more, CEO Holly Lange told me.

PCA says it served or delivered 2 million meals to elderly Philadelphia-area people last year, and helped 21,000 seniors stay out of expensive facilities by giving them "in-home care." New state rules effectively shaved $10 million from state home-care funding for the agency last fiscal year. But Lang said the agency is rebuilding its budget, and  by next year should be back around previous income and spending levels.

Earlier: Citing "declining reserves and revenues" and "anemic" cash flow, Moody's Investors Service has cut the Philadelphia Corporation for the Aging's credit rating to Baa2 ("medium grade, with some speculative elements and moderate credit risk"), from Baa1. The new rating is one step above the "junk-bond" level that would put PCA's debt, currently $18 million (taxable plus tax-free), off limits to some insurers and other conservative investors, likely forcing the agency to pay lenders more if it borrows again.

Moody's also gave the agency a "negative outlook" threatening another downgrade, due to "budgetary pressure at the Commonwealth of Pennsylvania," which controls more than 60% of PCA funding through a block grant, wrote Moody's analyst Emily Schwarz in a report to clients. She also warned of government "reimbursement delays."

The agency cut its budget 5% last year due to reduced government funding, according to Schwarz's report. But even with the cuts, cash flow (income over expenses) "narrowed to a very low 2%" in the past fiscal year, half the previous level, she added. With most of its money coming from state and federal agencies, PCA is vulnerable "to budgetary and political changes," Schwarz wrote.

Moody's says the spending cuts should have been deeper; Lange says she held the line, the worst is over, and the agency made the right call.