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KBRA Assigns BBB- Rating to Board of Education of the City of Chicago Unlimited Tax General Obligation Bonds (Dedicated Revenues), Series 2026A; Affirms Related Ratings; Outlook Remains Negative

23 Oct 2026   |   New York

Contacts

KBRA assigns a long-term rating of BBB- to the Board of Education of the City of Chicago Unlimited Tax General Obligation Bonds (Dedicated Revenues), Series 2026A. KBRA additionally affirms the long-term ratings of BBB- for the District's Unlimited Tax General Obligation Bonds (Dedicated Revenues) without special revenue legal opinions and BBB for the District's Unlimited Tax General Obligation Bonds (Dedicated Revenues) with special revenue legal opinions. The rating Outlook remains Negative.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

  • Sound security structure, with pledged state aid revenues as the primary source of repayment and a dedicated property tax levy as a secondary source. The dedicated property tax levy, if required, is directly deposited with the Bond Trustee.
  • State funding under the formula implemented 2017 includes hold harmless provisions that substantially mitigate direct enrollment decline related funding risk.
  • The Board’s annual teachers’ pension costs are supplemented by a dedicated pension property tax levy and the State contribution for normal pension costs.

Credit Challenges

  • The District’s narrow cash flow position necessitates reliance on TAN borrowing to support operations at various points throughout the fiscal year, and significant delays in Cook County’s distribution of property tax receipts each year since FY 2023 has exacerbated this reliance.
  • Extremely limited financial flexibility due to rising fixed costs (debt service, required pension contributions, and contractual teacher salary increases) with minimal ability to increase revenues.
  • Recent management turnover and the completion of a transition from a board appointed entirely by the Mayor of Chicago to a fully elected board in January 2027 present challenges with respect to continuous operational improvement and continuity of vision. However, KBRA recognizes the permanent appointment of a highly credentialed CEO and CFO in 2026 positively.

Rating Sensitivities

For Upgrade

  • Sustained improvement in the Board’s liquidity position.
  • Structurally balanced operations, supported by minimal use of uncertain and one-time revenue sources.

For Downgrade

  • Further deterioration in the Board’s liquidity position coupled with indications of increasingly constrained market access for cash-flow borrowing.
  • Non-adherence to fiscal discipline and/or Board adoption of credit negative policies including borrowing for operations or excessive reliance on uncertain or non-recurring revenues.

To access ratings and relevant documents, click here.

Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1017689