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- CUSIP bond identifier: 797356JN3
- Issuer/Obligor: San Diego Unified School District
- Impact entity rated by HIP: San Diego Unified School District, as a sustainable bond
- Muni sector: K12 school districts, education
- Closing date: October 4, 2023
- Bond amount: $320 million
- Coupon: 5%
- HIP Impact Rating: 79.7 connoting “net positive” on 100-point scale
- Opportunity Zones located in the issuing entity: 47 Opportunity Zones in San Diego County, Calif., encompassing 224,933 residents
- Climate Threat Resilience Rating: 57.1 connoting “more resilient” on 100-point scale
The San Diego Unified School District is issuing a $320 million sustainable bond under the authorization of a local ballot measure. Measure U was approved by more than 65% of San Diego voters last year and allows for $3.2 billion in bonds issuances to renovate, repair and revitalize district schools and learning environments.
The Bonds adhere to the ICMA Sustainability Bond Guidelines, as the proceeds will finance K12 education projects that contribute to social and environmental impact goals.
In 2014, the SDUSD board adopted a plan, called “Dream Big Solutions for a Sustainable Future”, that seeks to achieve net-zero energy district-wide by 2035, aligning with the City of San Diego’s Climate Action Plan. SDUSD has since taken a number of steps to reduce the environmental impact of its facilities and operations, including a “Fossil Fuel Free” resolution to electrify all district buildings, bus fleets and maintenance vehicles.
The district has also completed the construction of 75 solar systems, which will generate more than 32 million kilowatt-hours of clean electricity per year. These PV systems are expected to supply 50% of the district’s total electricity needs, reducing annual carbon emissions by approximately 13,000 tons annually.
The proceeds of SDUSD’s bonds will further support the district’s energy efficiency and sustainability projects, including adoption of solar energy, battery storage systems and LED lighting; water conservation; procurement electric school buses and charging infrastructure; and school facility renovation in line with California’s mandatory Green Building Standards Code (CALGreen).
Equitable education access
Multiple studies show that increases in school spending can result in greater educational and economic outcomes, benefiting all students but particularly those with low-income backgrounds.
According to the SDUSD’s latest student population data, 56% of students are from economically disadvantaged households, and over 6,000 students experience homelessness. Given the great diversity of student demographics districtwide, several Measure U projects are designed to make a significant social impact, including: support for career and technical education, early childhood education, homeless student accommodation, student health and safety, and affordable housing for teachers.
One example is Universal Transitional Kindergarten, or UTK, facility improvement. UTK is a California-wide program to bring four year olds into the educational system sooner, to optimize early childhood learning and help close achievement gaps between wealthier and lower-income families. From the 2021 to 2022 school year, the number of children in UTK programs district-wide increased by 54%, despite declining enrollment in other grades.
Impacts of green upgrade efforts financed by the bonds could extend beyond their environmentally-sustainable future for children districtwide by helping educate students and staff on the fundamental principles of sustainability.
SDUSD is also actively developing a curriculum for students to learn about and prepare for future pathways in electrification and clean energy fields.
By investing in these initiatives and educational programs, SDUSD not only reinforces its commitment to sustainability, but also prepares the next generation to become informed and proactive environmental stewards, ready to champion the principles of sustainability in their future endeavors.
HIP impact analysis
HIP’s K-12 Impact rating is based on 10 data-driven metrics across 18,158 K12 school districts and entities nationwide. San Diego Unified School District’s sustainability bond earns an overall HIP rating of 79.7%, positioning it within the top 3% of all entities in the HIP K12 universe.
The overall HIP rating framework for K-12 entities is based on four pillars: health, wealth, earth and trust. SDUSD’s bond achieves a HIP health pillar rating of 61.4%,wealth pillar rating of 97%, a earth pillar rating of 100%, and a trust pillar rating of 92.7%.
Notably, SDUSD excels in the metric of “solar capacity per student,” with an impressive 0.26 kW of solar capacity per student. This figure is more than three times higher than the nationwide student weighted average of 0.07 kW of solar capacity per student, as reported by Generation 180.
Additionally, SDUSD performs above average in the “free or reduced lunch provision” metric by providing this meal service to 54.9% of the district’s students.
HIP’s net positive rating confirms SDUSD’s dedication to a more sustainable future and equitable education resources for children, with job training and skills for our future leaders, who will be needed influencers in future climate action.
DISCLOSURE: HIP Investor Inc. is a state-registered investment adviser in several jurisdictions, and HIP Investor Ratings LLC is an impact-ratings firm evaluating impact and ESG on 123,000 municipal entities, 250,000 muni-bond issuances, and 12,000 corporates for equities and bonds. HIP Impact Ratings are for your information and education – and are not intended to be investment recommendations. Past performance is not indicative of future results. All investments are risky and could lose value. Please consult your investment professionals to evaluate if any investment is appropriate for you, your goals, and your risk-return-impact profile.
Liana Lan is an ESG and impact investing Analyst at HIP Investor Ratings