KBRA has assigned a long-term rating of AAA to the Los Angeles Unified School District (County of Los Angeles, California) General Obligation Bonds, Series QRRUS (2026) (Dedicated Unlimited Ad Valorem Property Tax Bonds). Concurrently, KBRA has affirmed the long-term rating of AAA on outstanding parity General Obligation Bonds of the District. The Outlook is Stable.

The long-term rating reflects the exceptionally strong security structure supporting repayment of the District’s General Obligation (“G.O.”) Bonds (the “Bonds”), together with the consistent performance and breadth of the Los Angeles Unified School District’s (“LAUSD” or the “District”) property tax base upon which ad valorem taxes pledged to the payment of debt service are levied. Because debt service is secured by an unlimited ad valorem property tax levied on taxable property within the District, KBRA’s analysis places predominant weight on these security features.

Key Credit Considerations

The rating actions reflect 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 school district accounting, fiscal monitoring and reporting outlined in AB 1200 is a key credit strength for California school districts.

Credit Challenges

  • Assessed value growth is tempered by Proposition 13 of 1978 which limits the appreciation of existing residential property to the lesser of 2% or CPI in the absence of significant improvement or transfer in ownership.

Rating Sensitivities

For Upgrade

  • Not applicable at the AAA rating level.

For Downgrade

  • Material tax base erosion that necessitates a substantial increase in the tax rate required for payment of debt service.

  • While not anticipated, legislative or judicial outcomes that are not in keeping with KBRA’s understanding of the protections afforded to G.O. bondholders by the security structure and by the statutory framework for school district bankruptcies in the State.

To access ratings and relevant documents, click here.

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: 1017487

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