KBRA assigns a short-term rating of K1+ to the San Diego Unified School District (San Diego County, California): 2024 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2018, Series H-1) (Green Bonds) (Federally Taxable); 2024 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2022, Series B-1) (Sustainability Bonds) (Federally Taxable); and, 2024 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2008, Series O-1) (Green Bonds) (Federally Taxable).

KBRA additionally assigns a long-term rating of AAA to the District's: 2024 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2018, Series H-2) (Green Bonds); 2024 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2022, Series B-2) (Sustainability Bonds) (Federally Taxable); 2024 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2022, Series B-3) (Sustainability Bonds); and, 2024 General Obligation Bonds (Dedicated Unlimited Ad Valorem Property Tax Bonds) (Election of 2008, Series O-2) (Green Bonds).

Lastly, KBRA affirms the long-term rating of AAA for the District's outstanding General Obligation Bonds.

The Outlook for the long-term ratings 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.

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: 1005663

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