KBRA Assigns A+ Rating, Stable Outlook to City Colleges of Chicago, IL Unlimited Tax Obligations
5 Mar 2026 | New York
KBRA assigns a long-term rating of A+ to the Unlimited Tax General Obligation Bonds (Dedicated Revenues), Series 2026 issued by Community College District Number 508, which does business as the City Colleges of Chicago. Proceeds of the Series 2026 Bonds will fund the construction, acquisition, and equipping of projects in the District's capital improvement plan (CIP); capitalized interest through 2026; the premium for a Bond Insurance Policy; and various costs of issuance. The Outlook is Stable.
Unlimited Tax General Obligation (UTGO) Bonds (Dedicated Revenues), including the Series 2026 Bonds, are payable first from Student Tuition and Fee Revenues and State Grant Revenues (collectively “Pledged Revenues”) in amounts sufficient to provide 125% coverage of annual debt service. To the extent the Pledged Revenues are insufficient to pay debt service on the Bonds, the Bonds are payable from ad valorem taxes (“Pledged Taxes”) levied against all taxable property in the District without limitation as to rate or amount. The Indenture permits the District to abate the annual tax levy for debt service only if, and to the extent, Pledged Revenues on deposit in the Pledged Revenues account are sufficient to pay debt service. While Pledged Revenues are currently sufficient to meet the minimum required coverage level, and are projected to remain so, KBRA’s rating reflects the inherent strength of the UTGO backstop, which serves as the ultimate payment source for the UTGO Bonds in the event of a Pledged Revenues deficiency.
Key Credit Considerations
The rating action reflects the following key credit considerations:
Credit Positives
- Participation in the deep and diverse economy of Chicago, and its sizable tax base.
- Positive enrollment trends, with full-time equivalent (FTE) enrollment reaching a record level (21,485) in FY 2025.
Credit Challenges
- Material budgetary reliance on State support for operations, including pension on-behalf payments.
- Recent weakness in operating performance.
The Stable Outlook reflects KBRA’s expectation that District financial performance will remain at or near breakeven, supported by healthy enrollment and funding. The tax base and Chicago economy, in KBRA’s view, will provide credit stability at the current rating level should Pledged Revenues weaken and insufficiently cover UTGO debt service.
Rating Sensitivities
For Upgrade
- Continued enrollment growth resulting in improved operating performance, along with further tax base expansion.
For Downgrade
- Substantial economic or financial deterioration leading to sustained enrollment declines and prolonged, material operating deficits.
To access ratings and relevant documents, click here.