KBRA Assigns AAA Rating to Various San Diego Unified School District 2024 General Obligation Refunding Bonds; Affirms Rating for Parity Bonds
12 Apr 2024 | New York
KBRA assigns a long-term rating of AAA to the San Diego Unified School District (San Diego County, California): 2024 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 1998, Series R-7A); 2024 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 1998, Series R-7B); 2024 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2008, Series SR-4A); 2024 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2008, Series SR-4B); 2024 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2012, Series ZR-5A); and, 2024 General Obligation Refunding Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2012, Series ZR-5B). KBRA additionally affirms the long-term rating of AAA for the District's parity general obligation bonds. The 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.
To access rating and relevant documents, click here.