# KBRA Assigns BBB- to Chicago Board of Education Series 2026A Bonds, Outlook Negative

> KBRA assigned BBB- to the Chicago Board of Education's Series 2026A dedicated revenue bonds and affirmed related ratings, keeping the outlook negative.

- Published: 2026-10-23T22:06:13+00:00
- Section: Earnings & Results
- Author: News Desk
- URL: https://newsforagent.com/news/2026-10-23/kbra-chicago-school-bonds-bbb-minus
- Source: [Business Wire](https://www.businesswire.com/news/home/20261023863201/en/)

## Key takeaways

- KBRA assigned a long-term BBB- rating to the Board of Education of the City of Chicago's Unlimited Tax General Obligation Bonds (Dedicated Revenues), Series 2026A.
- KBRA affirmed BBB- for the District's dedicated revenue bonds without special revenue legal opinions and BBB for those with special revenue legal opinions.
- The rating outlook remains Negative, with KBRA citing narrow cash flow and reliance on TAN borrowing among the credit challenges.

KBRA assigned a long-term BBB- rating to the Board of Education of the City of Chicago's Unlimited Tax General Obligation Bonds (Dedicated Revenues), Series 2026A, and affirmed related ratings, with the outlook remaining Negative, [Business Wire](https://www.businesswire.com/news/home/20261023863201/en/) reported on October 23, 2026. The board is the school district serving Chicago.

## KBRA's Rating Actions on the Chicago Bonds

KBRA affirmed a BBB- long-term rating for the District's Unlimited Tax General Obligation Bonds (Dedicated Revenues) without special revenue legal opinions, and a BBB rating for those with special revenue legal opinions. The rating actions rest on a sound security structure, with pledged state aid revenues as the primary source of repayment and a dedicated property tax levy as a secondary source. The dedicated property tax levy, if required, is deposited directly with the Bond Trustee.

State funding under the formula implemented in 2017 includes hold harmless provisions that substantially mitigate funding risk tied to direct enrollment decline, and the Board's annual teachers' pension costs are supplemented by a dedicated pension property tax levy and the State contribution for normal pension costs.

KBRA also listed credit challenges. The District's narrow cash flow position requires reliance on TAN borrowing to support operations at points during the fiscal year, and significant delays in Cook County's distribution of property tax receipts each year since FY 2023 have exacerbated that reliance. KBRA cited extremely limited financial flexibility from rising fixed costs, including debt service, required pension contributions and contractual teacher salary increases, with minimal ability to raise revenues. Recent management turnover and the completion of a transition from a board appointed entirely by the Mayor of Chicago to a fully elected board in January 2027 present challenges for continuous operational improvement and continuity of vision, though KBRA recognized the permanent appointment of a highly credentialed CEO and CFO in 2026 positively.

An upgrade would require sustained improvement in the Board's liquidity position and structurally balanced operations supported by minimal use of uncertain and one-time revenue sources. A downgrade could follow further deterioration in liquidity coupled with indications of increasingly constrained market access for cash-flow borrowing, or non-adherence to fiscal discipline and Board adoption of credit negative policies including borrowing for operations or excessive reliance on uncertain or non-recurring revenues.

## KBRA's Recent Rating Assignments

KBRA assigned preliminary ratings to three classes of notes from US Signal Issuer LLC and US Signal Co-Issuer LLC Series 2026-1/2, a colocation data center ABS, FinancialContent Business Page reported on October 23, 2026. On the same date, KBRA assigned preliminary ratings to five note classes of Foundation Finance Trust 2026-2, an asset-backed securitization of unsecured consumer loans, and to 96 classes of mortgage pass-through certificates from Chase Home Lending Mortgage Trust 2026-JINV2, a prime investor RMBS transaction.

## Chicago Board's Elected Board Transition

The transition to a fully elected Board of Education of the City of Chicago is scheduled for January 2027, a change KBRA said presents challenges for operational improvement and continuity of vision.

## Companies in this story

- KBRA · website: https://www.kbra.com

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