SCUSD credit rating downgraded to junk status

Added: 2026-05-18

[00:00:01]HEAT.

[00:00:01]WE’LL TALK MORE ABOUT THAT A LITTLE BIT.

[00:00:04]ALL RIGHT HEATHER, THANK YOU.

[00:00:06]NEW TONIGHT A BAD GRADE FOR THE SACRAMENTO CITY UNIFIED SCHOOL DISTRICT, ONE OF THE WORLD’S LEADING RATING AGENCIES DOWNGRADED THEIR CREDIT SCORE AND BLAMED THE DISTRICT LEADERSHIP.

[00:00:15]THE DISTRICT IS STILL STRUGGLING TO CLOSE A $170 MILLION BUDGET DEFICIT AND AVOID A STATE TAKEOVER.

[00:00:23]AND NOW THE CREDIT AGENCY FITCH HAS DOWNGRADED THEIR CREDIT RATING TO JUNK STATUS.

[00:00:29]KCRA 3’S CURTIS JOINS US NOW TO EXPLAIN THE IMPACT.

[00:00:33]WELL, FITCH DOWNGRADED THE DISTRICT’S RATING FROM AN A OR A HIGH CREDIT QUALITY TO A B B, WHICH IS CONSIDERED SPECULATIVE OR JUNK TERRITORY.

[00:00:43]AND THAT MEANS IT’S SEEN AS A MUCH RISKIER INVESTMENT.

[00:00:46]THE COMPANY’S MOVE WAS TRIGGERED BY A REPORT FROM STATE ORGANIZATION THAT HELPS DISTRICTS IN BUDGET EMERGENCIES, THE FISCAL CRISIS AND MANAGEMENT ASSISTANCE TEAM SAID THE DISTRICT WILL RUN OUT OF MONEY BY THE END OF JUNE.

[00:01:00]WELL, FITCH SAYS THE DISTRICT’S FISCAL DISTRESS HAS STEMMED PRIMARILY FROM A HISTORY OF POOR BUDGETARY OVERSIGHT AND OVERSPENDING, WEAK MANAGEMENT PRACTICES AND INADEQUATE RESPONSE TO BUDGETARY CHALLENGES.

[00:01:12]SO WHAT IS THE IMPACT?

[00:01:14]WE CALLED IN KCRA 3’S MONEY EXPERT KELLY BROTHERS TO EXPLAIN.

[00:01:17]THE EASIEST WAY TO THINK ABOUT IT IS LIKE OUR PERSONAL CREDIT RATING.

[00:01:21]IF YOU WANT TO BORROW MONEY FOR A HOUSE OR A CAR, IF YOU’VE GOT THAT CREDIT RATING UP THERE AT 700 OR HIGHER, YOU’RE GOING TO DO OKAY.

[00:01:29]YOU’RE GOING TO YOU’RE GOING TO BE ABLE TO BORROW MONEY AT A DECENT RATE.

[00:01:34]IF YOUR CREDIT RATING HAS SLIPPED, THAT MEANS YOU’RE A BIGGER CREDIT RISK.

[00:01:38]SO IF YOU CAN GET FINANCING, THEY’RE GOING TO CHARGE YOU MORE MONEY BECAUSE YOU’RE A HIGHER CREDIT RISK.

[00:01:43]NOW, THE FITCH REPORT WARNS THE DISTRICT’S RATING COULD DROP EVEN MORE, BUT SAYS ONE THING COULD STOP THAT.

[00:01:49]IF THE BOARD TAKES A LOAN FROM THE STATE AND SURRENDERS CONTROL OF THE DISTRICT.

[00:01:54]EARLIER THIS WEEK, THE PRESIDENT OF THE SCHOOL BOARD RELEASED A STATEMENT SAYING, IN PART WHILE ASKING THE STATE FOR A LOAN WOULD PROVIDE FINANCIAL SUPPORT.

[00:02:02]STATE RECEIVERSHIP ALSO INCLUDES THE LOSS OF LOCAL INPUT ON THE CUTS THAT WE HAVE TO MAKE REGARDLESS, AND EVEN MORE BALLS ARE UP IN THE AIR TONIGHT.

[00:02:11]THE DISTRICT MAY ACTUALLY GET MORE MONEY BECAUSE OF THE UPDATED STATE BUDGET, SO IT’S TOO EARLY TO TELL HOW THIS COULD IMPACT THE DISTRICT’S FINANCES.

[00:02:20]AND KCRA THREE REACHED OUT TO THE SCHOOL DISTRICT.

[00:02:22]WE ARE STILL WAITING FOR A RESPONSE, AND WE DO NEED TO NOTE