Hilltop has revised its outlook for the charter school sector from stable to unbalanced, signaling growing divergence in credit quality across states. This outlook covers the approximately $4.6 billion in debt issued in 2025 and an expectation of a similar issuance trend in 2026.

Five states: California, Texas, Florida, Arizona and New York account for over 1.9 million or 50% of the 3.87 million charter school enrollment and 62% of the 2025 debt issuance. Therefore, it is critical to focus on individual state fiscal pressures and demographic trends, which we believe will inform the 2026 financial flexibility and stability of charter schools.

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