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 (2026) (Dedicated Unlimited Ad Valorem Property Tax Bonds), and 2026 General Obligation Refunding Bonds, Series A (Dedicated Unlimited Ad Valorem Property Tax Bonds).

Concurrently, KBRA affirms the long-term rating of AAA on the District's outstanding 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

• The District's financial operations are increasingly challenged, as evidenced by continued deficit spending and projections of significantly reduced fund balance through FY 2028.

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.
• Deterioration in the District’s underlying credit profile to a level at which the structural protections no longer provide support consistent with the current rating.
• Reduction in the General Fund balance below the 5% of expenditures policy threshold could pressure the rating.

To access ratings and relevant documents, click here.

Methodologies

• Public Finance: U.S. Local Government General Obligation Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1014450

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