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U.S. PUBLIC FINANCE

Aaa Aa A Baa Ba B Caa Ca
State-Determined The state The state The state The state The state rarely The state does Not applicable. Not applicable.
Revenue Framework: provides or provides or provides or provides or provides or not provide or
The state determines the allows for allows for allows for allows for allows for allow for
bulk of the school regular, sizable regular, increases to the increases to the increases to the increases to the
district’s operating increases to the predictable bulk of the bulk of the bulk of the bulk of the
revenue, which is bulk of the increases to the school district’s school district’s school district’s school district’s
generated from state or school district’s bulk of the revenue, revenue, revenue, revenue and
local sources. revenue; the school district’s although the although the sometimes frequently
state never revenue; timing or timing or reduces reduces
decreases, and amount of the amount of the revenue revenue
holds flat or the school increases may increases may without without
delays the district can vary or the vary or the advance notice advance notice
school district’s generate state state or often delays or delays
revenue; and meaningful sometimes sometimes disbursements disbursements
the school additional holds this holds this for prolonged for more than
district can locally revenue flat, revenue flat, periods. one fiscal year.
generate determined modestly modestly
meaningful operating reduces this reduces this
additional revenue. revenue or revenue or
locally occasionally occasionally
determined delays delays
operating disbursements; disbursements;
revenue. and or
the school the school
district can district cannot
generate generate
meaningful meaningful
additional additional
locally locally
determined determined
operating operating
revenue. revenue.
Factor: Leverage (30%)
Long-term Liabilities Ratio 20% ≤ 125% 125 – 250% 250 – 400% 400 – 550% 550 – 700% 700 – 850% 850 – 1,000% > 1,000%
((Debt + Adjusted Net
Pension Liabilities +
Adjusted Net Other Post-
Employment Benefits) /
Operating Revenue)
*6
Fixed-Costs Ratio 10% ≤ 15% 15 - 20% 20 - 25% 25 - 30% 30 - 35% 35 – 45% 45 - 55% > 55%
(Adjusted Fixed Costs /
Operating Revenue)
*7

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