LOS ANGELES — Los Angeles Unified School District has four times the unfunded OPEB liability of its closest peers, according to a Moody's Investors Service report.
The school district's credit rating at Aa2, with a stable outlook, remains strong despite this situation because it has other notable credit strengths, Moody's analysts wrote in Monday's report.
The report compared LAUSD to the next four largest independent school districts in the nation. Among those were Chicago Public Schools, rated B2 negative, Miami-Dade County School District, rated Aa3 stable, Nevada's Clark County School District, rated A1 stable, and Florida's Broward County School District rated Aa2 stable.
"Even though LAUSD's unfunded liability represents 366.0% of covered payroll (over four times that of its closest peer), the credit remains strong among the peer group because of the district's other notable credit strengths," a Moody's spokesperson wrote.
Those credit strengths include: a significantly larger tax base, growing general fund revenues, strong reserve levels, strong management team, notable credit features of California's general obligation pledge and average debt and pension levels, excluding OPEB.
LAUSD is also the only district of the peer group that has established an OPEB trust and formulated a funding plan to pay down its liability.
"That being said, LAUSD's OPEB offering – which is far more generous than its peers – will negatively weigh on the district's credit due to escalating needs for retirees and sizeable annual required contributions," the spokesperson wrote.