Philadelphia school district maintains highest credit rating in its history

The School District of Philadelphia has retained the highest credit rating in its history, affirmed by the 2025 Fitch Ratings. This could signify more favorable rates for Philadelphia schools to borrow money, saving taxpayer dollars.

The district’s credit default issuer rating remains a BBB-, or stable outlook, consistent with last year’s Fitch Ratings when the district received an investment-grade rating for the first time. 

The agency also maintained a rating of AA- on the district’s outstanding General Obligation debt, citing the Pennsylvania School Code’s intercept provisions. Fitch Ratings has maintained the district’s credit outlook as Stable.

Credit ratings, like the ones issued by Fitch Ratings, help investors and the public understand how financially reliable a borrower is. 

Fitch ratings range from AAA to D, with BBB and above considered investment grade, meaning relatively low risk. Lower ratings fall into the speculative category, signaling a higher risk of missed payments.

Fitch assigns ratings to specific loans or bonds and various organizations, including school districts. These ratings don’t guarantee repayment, but they serve as a tool for judging creditworthiness. In short, a better rating can help an organization borrow money more cheaply, saving taxpayer dollars in the long run.

District officials said the improved financial standing will allow Philadelphia schools to borrow money at more favorable rates, a significant advantage amid rising costs and waning federal support.

“I am beyond thrilled that our district has maintained our highest-ever bond ratings,” Superintendent Tony B. Watlington Sr. said in a statement. “These upgrades validate that we are good stewards of our finances, and our improved performance in nine out of 13 academic areas suggests that investing more resources in our schools and scholars will result in an additional return on investment.”

The School District of Philadelphia is the nation's eighth largest school district, with Watlington serving as superintendent for the past three years. (Credit: Philly Schools LinkedIn) The district reported academic and enrollment gains over the past two years, including:

• An increase of 1,841 students
• More than 3,500 additional students have attended school at least 90% of the time.
• A 6.2 percentage point increase in third-grade reading proficiency
• A 6.6-point rise in third-grade math proficiency
• A 5.5-point gain in math proficiency across grades 3–8
• A 13.5-point increase in the Career and Technical Education (NOCTI) pass rate
• A 6.3-point rise in the four-year graduation rate
• A reduction of 1,400 student dropouts

Despite the fiscal progress, district officials warned of budget pressures ahead. The expiration of federal COVID-19 relief funding is expected to create increasing deficits in future years.

“Maintaining this rating during a challenging fiscal period and the recent academic progress are both evidence of the School District of Philadelphia’s ongoing ability to efficiently use limited resources,” Chief Financial Officer Michael Herbstman wrote in a statement. “However, we have now entered a new fiscal period … where we anticipate increasing deficits each year.”

Herbstman called on state lawmakers to boost funding, saying continued support is essential to sustain academic gains and implement the district’s Accelerate Philly initiative—a five-year strategic plan announced in 2023. 

The School District of Philadelphia serves more than 200,000 students and remains the largest public school system in Pennsylvania.