KBRA Assigns K1+ Rating to Cobb County School District, GA's Short-Term Construction Notes, Series 2026; Affirms K1+ Rating for Series 2025 Construction Notes and AAA Rating for Implied G.O. Credit
9 Dec 2025 | New York
KBRA assigns a short-term rating of K1+ to Cobb County School District, Georgia's Short-Term Construction Notes, Series 2026, due December 15, 2026. Proceeds will be applied toward the current expenses of acquiring, constructing, equipping and upgrading various school facilities and improvements approved by voters at referendum, and to pay expenses related thereto until the collection of a 1% sales and use tax for educational purposes (the "Sales Tax", or "Ed-SPLOST").
Additionally, KBRA affirms the short-term rating of K1+ on the District's Short-Term Construction Notes, Series 2025 due December 15, 2025, and the long-term rating of AAA with a Stable Outlook for the District's Implied General Obligation Credit.
Key Credit Considerations
The rating was assigned because of the following key credit considerations:
Credit Positives
- Consistently sound historic coverage of note debt service reflects a conservative approach to budgeting and cash flow management.
- Strong financial flexibility stems from solid General Fund reserves and the District’s ability to increase the General Fund millage rate, if necessary, to support operations and Note debt service.
- The absence of long-term general obligation debt, which somewhat offsets the moderate fixed cost burden stemming from the District’s full pension ADC funding and large annual OPEB pay-go contribution.
- The broad and growing resource base demonstrates very favorable trends in assessed valuation, per capita income, and employment.
Credit Challenges
- Ed-SPLOST revenues are economically sensitive and subject to volatility.
- Salaries and fringe benefits consume a high 94% of the District’s budget.
The Stable Outlook on the long-term implied G.O. rating reflects our expectations for continued growth in ad valorem taxes from the District’s wealthy, expanding property tax base along with management’s long-standing, responsible budgeting, that supports solid General Fund reserves. We view these factors as providing an adequate cushion against potential declines in the State Quality Basic Education (“QBE”) funding formula related to an economic downturn.
Rating Sensitivities
For Upgrade
- Not applicable.
For Downgrade
- Unanticipated declines in Ed-SPLOST revenues or increases in Ed-SPLOST capital outlays during calendar year 2026, resulting in materially diminished anticipated cash flow coverage that necessitates use of ad valorem revenues to pay principal and interest on the Notes when due.
- Trend of General Fund drawdowns to support operations, resulting in a significant deterioration in unassigned fund balance.
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