Press Release|Public Finance
KBRA Assigns AAA Rating, Stable Outlook to Los Angeles Unified School District General Obligation Bonds, Series QRR (2024) (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Sustainability Bonds)
16 Sep 2024 | New York
KBRA has assigned a long-term rating of AAA to the Los Angeles Unified School District (County of Los Angeles, CA) General Obligation Bonds, Series QRR (2024) (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Sustainability Bonds). Concurrently, the AAA rating is affirmed on the District's outstanding General Obligation Bonds. The Outlook on all bonds is Stable.
Key Credit Considerations
The rating was assigned because of the following key credit considerations:
Credit Positives
- A broad, 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 external counsel, KBRA considers the bondholder protections afforded by the California constitution and state law to be robust.
- The statutory framework for fiscal monitoring and reporting outlined in AB 1200 is a key credit strength for California school districts.
Credit Challenges
- The District projects continued declines in average daily attendance, which is the basis for state funding.
- Financial operations are challenged, as evidenced by continued deficit spending, with projections of significantly reduced fund balance through FY 2027.
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.
- Reduction in the General Fund balance below the 5% of expenditures policy threshold could pressure the rating.
To access rating and relevant documents, click here.