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U.S. PUBLIC FINANCE

Scope of This Methodology

This methodology applies to US public school districts that provide public education directly to students,
typically from pre-kindergarten or kindergarten through 12th grade (K-12) or a subset of grades within this
range. The entities rated under this methodology may operate as comprehensive K-12 school districts or as
specialized or vocational schools. School districts rated under this methodology are operationally
independent from a city or county government and have the power to issue debt on their own behalf or
through a dedicated financing vehicle.

This methodology also applies to school district-related units, including entities or sub-districts created to
issue debt or debt-like obligations on behalf of a school district. Such related units include school districts
that no longer educate students but have debt outstanding. Publicly managed charter schools, also called
dependent charter schools, are also rated under this methodology.

Privately managed K-12 charter schools, which typically receive public funding, are rated under a separate
methodology. Independent (private) schools, whose primary funding sources are private tuition or
3
charitable giving and endowments, are also rated under a separate methodology. This methodology also
does not apply to colleges or universities, nor does it apply to school districts that are operating units of city
or county governments and that do not issue their own debt. State school district enhancement programs,
such as state aid intercepts, and the enhanced ratings of financings that benefit from such programs, are
also rated under separate methodologies.

The methodology does not apply to school district special tax and special assessment obligations, which are
rated under separate methodologies.

Sector Overview

In the US, a public school district is typically a governmental entity that has taxing authority and provides
elementary or secondary school education within a defined geographic boundary. K-12 education is a
primary mission of state government; most states delegate this responsibility to local school districts
while mandating or strongly influencing their school districts’ curriculum, revenue-raising ability and
spending priorities.

Although school districts are typically autonomous, their institutional frameworks are established and
4
defined by the state’s constitution, laws or court decisions. School district operating revenue is typically a
combination of state aid and locally sourced revenue.

Some of the school districts covered in this methodology provide education but do not have taxing
authority. They instead receive all of their operating revenue from other local governments or the state.

This publication does not announce
a credit rating action. For any
credit ratings referenced in this
publication, please see the ratings
tab on the issuer/entity page on
www.moodys.com for the most
updated credit rating action
information and rating history.

3 A link to a list of sector and cross-sector methodologies can be found in the “Moody’s Related Publications” section.
4 Hawaii is an exception. It provides K-12 education directly and has no local school districts. In some other states, K-12 education is generally provided by
departments of cities or counties rather than by stand-alone school districts.

2 JANUARY 26, 2021 RATING METHODOLOGY: US K–12 PUBLIC SCHOOL DISTRICTS