Press Release|Public Finance

KBRA Assigns AAA Rating to Los Angeles Unified School District General Obligation Bonds, Series QRR (2023); Affirms Rating for Parity Bonds; Outlook Remains Stable

13 Oct 2023   |   New York


KBRA assigns a long-term rating of AAA to the Los Angeles Unified School District (County of Los Angeles, CA) General Obligation Bonds, Series QRR (2023) (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Sustainability Bonds) and affirms the long-term rating AAA for parity bonds. The outlook remains Stable.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

  • Outsized and diverse tax base with historically favorable trends in wealth, commercial activity, and property values provides a very strong source of GO debt repayment.
  • Per consultation with KBRA external counsel, robust bondholder protections are afforded by the California constitution and state law.
  • The statutory framework for fiscal monitoring and reporting outlined in AB 1200 is a key credit strength for California school districts.

Credit Challenges

  • District average daily attendance, which is the basis for State funding, is declining.
  • Financial operations are challenged as evidenced by outyear budget projections for significantly reduced fund balance through FY 2026.

Rating Sensitivities

For Upgrade

  • Not applicable at AAA rating level.

For Downgrade

  • Significant tax base decline necessitating a substantial increase in the tax rate required for debt service.
  • A reduction in the general fund balance below the 5% of expenditures threshold identified pursuant the District’s budget and finance policy as the minimum reserve threshold could pressure the rating.

To access rating and relevant documents, click here.


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