Press Release|Public Finance
KBRA Assigns AAA Rating to the Los Angeles Unified School District 2024 General Obligation Refunding Bonds, Series A (Dedicated Unlimited Ad Valorem Property Tax Bonds); the Outlook is Stable
15 Apr 2024 | New York
KBRA assigns a long-term rating of AAA to the Los Angeles Unified School District (County of Los Angeles, CA) 2024 General Obligation Refunding Bonds, Series A (Dedicated Unlimited Ad Valorem Property Tax Bonds). Concurrently, KBRA affirms the AAA rating on the District's outstanding parity General Obligation Bonds. The Outlook 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
- Continued declines in average daily attendance, which is the basis for state funding, are projected.
- Financial operations are challenged, as evidenced by continued deficit spending, with projections of 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.
- 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.