Hayward Unified School District, CA Bond Rating Outlook Revised To Negative On Continued Deficits; ‘A+’ Rating Affirmed
CHICAGO (S&P Global Ratings) March 28, 2025--S&P Global Ratings revised the outlook to negative from stable and affirmed its 'A+' long-term rating and underlying rating (SPUR) on Hayward Unified School District (USD), Calif.'s general obligation (GO) bonds outstanding. At the same time, we revised the outlook to negative from stable and affirmed our 'A' long-term rating on the district's certificates of participation (COPs) outstanding. In addition, we assigned our 'A+' long-term rating to the district's proposed $61.5 million series 2025 (election of 2024) GO bonds and $29.3 million series 2025 GO refunding bonds.
"The outlook revision reflects our view of Hayward USD's recently declined fund balance position and projected operational deficit in 2025, and to a lesser extent in 2026 and 2027. The district is currently addressing recent imbalance through its fiscal solvency plan. Even so, given projections, we believe there is material risk that the district will not maintain adequate available fund balances.," Mr. Smith added.
The GO rating reflects the application of our criteria, "Methodology For Rating U.S. Governments," published Sept. 9, 2024.
Revenue from unlimited ad valorem taxes levied on taxable property in the district secures the GO and refunding bonds. Proceeds from the series 2025 bonds will be used to finance specific school facility construction and improvement projects. The district's 2025 refunding bonds are being issued to refund all or a portion of the district's GO bonds outstanding.
The COPs are payable from base rental payments by the district, as lessee, to the Hayward Schools Financing Corp., as lessor, for the use of certain assets. Consistent with our "Issue Credit Ratings Linked To U.S. Public Finance Obligors' Creditworthiness" criteria, published Nov. 20, 2019, we rate these COPs one notch lower than the district's general creditworthiness to account for the appropriation risk associated with the lease payments. Under the property lease agreement, the district has covenanted to budget and appropriate annual payments for use of the leased assets.
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| Primary Credit Analyst: | Kyron Smith, Chicago 4649271564; kyron.smith@spglobal.com |
| Secondary Contact: | Brian Phuvan, San Francisco + 1 (415) 371 5094; brian.phuvan@spglobal.com |
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