Fitch Ratings Affirms Vallejo City Unified School District’s Credit Rating
Fitch Ratings highlights VCUSD's strong financial stability and long-term resilience with affirmed credit ratings
VALLEJO, Calif. – Fitch Ratings has affirmed Vallejo City Unified School District's (VCUSD) issuer default rating (IDR) at 'A' and its unlimited tax general obligation (GO) bonds at 'AAA'. The rating outlook remains stable, and the IDR has been removed from "under criteria observation."
Fitch Ratings is a global credit rating agency that evaluates an entity's ability to meet financial obligations using a letter-based scale. Affirming the district's ratings shows Fitch's confidence in VCUSD's economic stability and creditworthiness. The removal from "under criteria observation" indicates the district's improved compliance with Fitch's rating standards.
"We are pleased with Fitch's affirmation of our strong financial standing and its confidence in our district's ability to meet long-term obligations," Vallejo City Unified School District Superintendent Rubén Aurelio said. "This rating reflects our commitment to responsible financial management, ensuring that we can continue providing quality education and services to our students and families while maintaining fiscal stability."
The 'A' IDR, a reflection of Fitch's new 'U.S. Public Finance Local Government Rating Criteria,' is a positive indicator of VCUSD's financial resilience. This rating, despite the 'limited' budgetary flexibility typical of California school districts, serves as a strong reassurance to stakeholders about the district's financial stability. Fitch's expectation of the district's general fund reserves returning to pre-pandemic levels further reinforces this, instilling a sense of confidence in the district's financial future.
VCUSD's IDR considers its 'midrange' long-term liability burden, including a planned $51 million bond issuance next year. This is balanced against 'weak' demographic and economic trends, such as slow population growth and higher-than-average unemployment rates. However, Fitch's note on the district's population and economy being sufficiently large and diverse to support its financial standing provides a comprehensive view of its financial situation.
The 'AAA' rating on VCUSD's unlimited tax GO bonds is based on a dedicated tax revenue analysis. Legal opinions from district counsel indicate that, in the event of financial receivership, the tax revenues used to repay these bonds would be classified as "pledged special revenues," allowing the bonds to be rated significantly higher than the district's IDR.
Fitch's rating actions highlight VCUSD's strong financial management and ability to meet long-term financial obligations. The stable outlook suggests the district is well-positioned to maintain its financial and operational performance in the future.
About Vallejo City Unified School District:
Vallejo City Unified School District serves over 9,900 students across 20 schools, including two comprehensive high schools, an alternative school, an adult school, and an independent charter. Our mission is to support academic achievement by providing high-quality education and fostering a supportive and inclusive community for all students.