Kent School District maintains strong Moody’s credit rating

Published 1:25 pm Tuesday, July 21, 2026

Despite recent financial struggles, the Kent School District received an Aa3 general obligation unlimited tax bond rating from New York-based Moody’s Ratings, showing continued confidence in the district’s long-term financial stability and creditworthiness.

The agency also recognized that district leaders have implemented significant expenditure reductions, resulting in a fiscal 2027 budget that is nearly balanced, according to a July 21 school district press release. The Kent School Board recently approved a budget for the 2026-2027 school year that includes a reduction of 229 employees to cover an estimated $32.5 million deficit.

“This rating affirmation reflects the disciplined work underway to maintain the district’s financial stability while continuing to serve students and families,” said Superintendent Israel Vela. “Although school districts across the state continue to face significant funding challenges, we have taken proactive steps to align our budget with enrollment and revenue realities while protecting educational opportunities for students.”

In its July 16 rating action, Moody’s cited the district’s strong local economy, above-average resident income levels, high assessed property values, and very low debt and pension burdens as key strengths supporting the Aa3 rating. The agency also recognized the district’s efforts to address budget pressures through ongoing expenditure reductions and long-term financial planning.

“In a climate of difficult school funding conditions, Kent School District has managed to maintain its strong Aa3 credit rating with Moody’s Ratings,” said Mark Prussing, with Educational Service District 112, the district’s financial advisor. “Moody’s has downgraded many Washington school district credit ratings over the past two years as state funding has put pressure on districts’ finances. Kent leadership has taken actions and made the difficult decisions necessary to maintain a solid financial position.”

Prussing said there is more work ahead as funding pressures are expected to continue in the coming years, but it’s a good sign.

“The affirmation of the current rating is a positive result for Kent School District and recognition of the hard work being done,” Prussing said.

Moody’s noted that Kent School District’s available general fund balance declined in fiscal 2025 and is expected to decrease further in fiscal 2026 due in part to rising special education costs and enrollment levels that were lower than budgeted.

“Rebuilding reserves will likely require additional local revenue growth and ongoing expenditure reductions,” according to the Moody’s report, which noted in fiscal 2025, the district’s available general fund balance declined to about 9% of revenue and that the district expects a fiscal 2026 deficit that will reduce available general fund balance to approximately 6% of revenue.

Aa3 is a credit rating in the middle of the investment grade credit ranking system, according to Investopedia.com. The rankings for Moody’s from highest to lowest in the investment grade category are Aaa, Aa1, Aa2, Aa3, A1, A2 and A3. Aa3 is four levels above junk status, which would mean a Ba1 rating. Ratings can go as low as C, which would mean a default rating because the borrower has either missed contractually obligated principal or interest payments.