KBRA Assigns AAA/K1+ Ratings to Various San Diego Unified School District General Obligation Bonds
25 Sep 2025 | New York
KBRA assigns a long-term rating of K1+ to the San Diego Unified School District (San Diego County, California): 2025 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2008, Series P-1) (Federally Taxable); 2025 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2018, Series I-1) (Federally Taxable); and, 2025 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2022, Series C-1) (Federally Taxable). KBRA additionally assigns a long-term rating of AAA to the District's: 2025 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2008, Series P-2); 2025 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2018, Series I-2); 2025 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2018, Series I-3); 2025 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2022, Series C-2); and, 2025 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2022, Series C-3). KBRA also affirms the long-term rating of AAA for the District's outstanding General Obligation Bonds. The rating Outlook is Stable.
Key Credit Considerations
The rating actions reflect the following key credit considerations:
Credit Positives
- Per consultation with KBRA external counsel, robust bondholder protections are afforded by California’s constitution and state law.
- Substantial and diverse tax base that continues to grow, with levy dedicated to debt repayment.
- Experienced management team, with demonstrated ability to manage challenges; augmented by significant state and county oversight and monitoring of District budgeting and fiscal reporting.
Credit Challenges
- Declining enrollment trend negatively impacts operating revenues.
- Limited operating revenue flexibility requires strong expenditure control to maintain financial health.
Rating Sensitivities
For Upgrade
- Not applicable at AAA rating level.
For Downgrade
- Significant tax base declines which would necessitate a substantial increase in the tax rate for debt service.
- A reduction in reserve levels below 2% of annual operating expenditures would erode financial flexibility and weaken credit strength.
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