Moody's Ratings on Tuesday upgraded the ratings of two California school districts and affirmed the investment grade ratings of a third.
All three school districts are in southern California, with two in Los Angeles County and one in Riverside County.
The actions reflect the districts' overall financial stability and management of various challenges, including fluctuating enrollment, according to the three Moody's reports.
Moody's upgraded the issuer rating on Corona-Norco Unified School District in Riverside County to Aa3 from A1 and its general obligation unlimited tax bond ratings to Aa2 from Aa3.
The outlook was revised to stable from positive at the new rating.
Moody's also assigned an Aa2 rating to the district's proposed $83.2 million 2026 general obligation refunding bonds, which will bring the district's outstanding GOULT debt to about $535 million.
The upgrade is driven by the district's strong financial position, which Moody's expects to remain balanced due to management's active expense control, including aligning staffing with declining enrollment. The district's available fund balance ratio was about 26% in fiscal 2024, and despite projected deficits in fiscal 2026 largely reflecting the planned use of restricted funds, the available general fund balance is anticipated to remain stable.
Corona-Norco USD has an estimated 2026 enrollment of 48,500 students, which reflects the continuation of a moderate enrollment decline of negative 0.9% in a three-year trend.
The issuer rating of Walnut Valley Unified School District, in Los Angeles County was upgraded to Aa1 from Aa2 and the GOULT rating upgraded to Aaa from Aa1 ahead of plans to issue $28 million in GO refunding bonds.
The upgrade reflects the district's robust financial position, with available general fund balance equaling 32% of revenue in fiscal 2025, and the expectation that reserves will remain solidly above 25% of revenue through fiscal 2028 year-end.
The rating also benefits from the district's "district of choice" status, with about one-third of total enrollment transferring in from other districts, which has supported positive enrollment growth of a 1.7% three-year compound annual growth rate.
The district, which is approximately 30 miles east of downtown Los Angeles and has a projected fiscal 2026 enrollment of 14,302 students, also benefits from a robust local economy with a very strong assessed value per capita of $290,000, Moody's said. Moody's does not assign an outlook to the rating.
Moody's affirmed the investment grade ratings for Whittier Union High School District, also in Los Angeles County, maintaining a Aa2 issuer rating and Aa1 ratings on the district's parity general obligation bonds. It also assigned its Aa1 rating to the district's anticipated $55 million 2026 general obligation refunding bonds. Post-issuance, the district will have roughly $185 million in total debt.
The Aa2 issuer rating incorporates the district's healthy general fund position of 20% of revenue, though this is projected to soften toward 15% of revenue due to ongoing enrollment declines, Moody's said. It does not assign an outlook.
Moody's analysts noted that Whittier Union HSD, with an estimated fiscal 2026 enrollment of 9,562, is connected to the Los Angeles metro economy and has an above-average long-term liability of 260%. A downgrade could be triggered by ongoing enrollment losses not met with budget reductions or a narrowing of available general fund balance approaching 10% of revenue.
