A fresh review from S&P Global Ratings, led by analysts Jane Ridley and Sarah Sullivant, paints a tougher picture for public school finances. In 2025, all rating buckets moved into negative territory, a first occurrence after the pandemic. About half of districts recorded operating deficits, a sharp rise from 33% in 2024.
S&P said downgrades and other negative moves ran at about a three to one clip versus upgrades, and the portion of districts tagged with a negative rating reached 6% in August compared with 4% a year earlier. The analysts wrote that "structural pressures are mounting," and that federal aid during Covid obscured longer running challenges. The firm also said it increasingly expects "credit pressure will continue."
When community finances shift, prudent investors revisit how they protect and grow savings. Join Briefs Finance CEO Jaspreet Singh on September 29th for a FREE live investor workshop, How to Profit From A Dollar That's Losing its Value, where he shows how we're spotting investment opportunities as the dollar falls. Save your spot.
Fewer students, higher costs, and more competition for a smaller pool of kids are squeezing district budgets, a trend the analysts said shows "no signs of abating." Falling birth rates and the rise of alternative school options are weighing on enrollment, and because public schools receive funding based on student counts, that decline hits revenue directly.
Expenses do not fall as fast as enrollment does. As S&P put it, "The dilemma is that expenditures generally do not drop as quickly as enrollment." The analysts added, "Losing 5% of students rarely equates to a 5% cut in expenditures because costs are spread across instruction, facilities and operations." Meanwhile, spending pressures are rising as staff and insurance costs increase and districts face growing obligations tied to special education.
A steady plan helps your money weather uncertain changes in local and national budgets. Our CEO Jaspreet Singh is hosting a FREE live investor workshop, How to Profit From A Dollar That's Losing its Value, on September 29th. Sign up free to join him live.
