KBRA has assigned a long-term rating of AAA to the Los Angeles Unified School District (County of Los Angeles, CA) General Obligation Bonds, Series QRR (2024) (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Sustainability Bonds). Concurrently, the AAA rating is affirmed on the District's outstanding General Obligation Bonds. The Outlook on all bonds 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 projects continued declines in average daily attendance, which is the basis for state funding.
• Financial operations are challenged, as evidenced by continued deficit spending, with projections of significantly reduced fund balance through FY 2027.

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.

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) is a full-service credit rating agency 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 by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1005927

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