Munis in your community: Scorecard

Your community, your investment

Municipal bonds fund the essential services Americans use every day—from schools and hospitals to roads and utilities. As one of the industry's largest and longest-tenured muni credit teams, Nuveen continuously analyzes the trends that shape credit quality across all market sectors.

Our research does more than identify attractive investment opportunities. It provides practical insights into the availability, cost, and quality of daily services—whether that's the price of an airline ticket, the strength of local transportation, or the reliability of critical utilities.

The Nuveen munis in your community scorecard explores these connections between effective municipal investing and Americans' lived experience, with deep dives into specific sectors as we update our analysis.

Munis in your community scorecard

Positive Neutral Negative

State and local governments

• State and local tax collections: Total tax revenue increased 5.4% YOY in 2025. States are focused on cost containment, and most enacted flat budgets in FY26. Elevated fuel prices could depress consumer spending, impact tax collections and drive up governmental expenses.
• State rainy day funds: Robust liquidity, with median rainy day fund balances projected to reach 14% by FYE26, up from pre-pandemic 8%.
• Unemployment: The U.S. unemployment rate was a low 4.3% in April 2026, but the Fed is cautious about labor market weakness.
• Economy: 2.0% GDP growth projected for 2026.
• Rating changes: Ratio of credit upgrades to downgrades is expected to return to historic norms of 1.5:1 as compared to 3:1 over the last two years. Moody’s ratio of upgrades to downgrades in Q1 2026 was 1.6:1.
• Federal policy: Recent federal aid pullbacks across Medicaid, transportation, disaster relief, SNAP and education will require state and local governments to demonstrate greater financial independence and operational resiliency.

Higher education

•  Enrollment: Enrollment grew 1% in fall 2025, driven by gains in undergraduate enrollment in community colleges and public 4-year programs. Undergraduate enrollment fell at four-year private universities.
• Demographic trends: National decline in high school graduates is projected to accelerate beginning in 2026. This is further exacerbated by restrictive immigration and visa policies, which are pressuring international enrollment.
•    State funding: Increases in state support following the pandemic have slowed down with a 1% year-over-year increase in 2026, following a 2.6% increase in 2025. Proposed growth for 2027 could be limited by state budget pressures and eroded by inflation.
• Endowment returns: The 13.4% return on S&P500 for the 12 months ended 30 June 2025 was favorable for endowments, following an 11.2% average endowment return for FYE 30 June 2024.
• Federal policy: Reduced federal student loans heighten affordability concerns. Fewer federal grants pressure revenue. Institutions that depend heavily on full-tuition international students should be disproportionally impacted by enrollment declines due to real and perceived reduced visa availability.

Water and sewer utilities

• Liquidity: Strong liquidity, with a median of 541 days cash on hand (DCOH) above pre-pandemic levels. Median debt service coverage holds steady at over 2.0x.
• Regulatory framework: Eased EPA enforcement on PFAS and lead and copper levels provides temporary capital relief. However, implementation delays will likely increase future compliance costs, pressuring rates and financially straining resource-limited communities.

Housing

• Strong demand: Need for more affordable housing in expensive markets supports ongoing construction.
• Increasing supply chain and labor costs: Iran conflict will likely raise construction material costs and disrupt supply chains. Immigration policy shifts continue to increase labor costs and shortages, potentially delaying projects.
• Interest rates: Higher rates slow movement, as current homeowners are reluctant to give up low-cost mortgages.

Health care

• Slow recovery: Operating margins are starting to recover as labor and supply expense cost growth has abated.
• Medicaid cuts: Federal policy changes will reduce Medicaid payments to states beginning in 2027. The impact on hospitals will likely vary widely by state.
• Demographic trends: Demand for services will grow due to aging population.

Transportation

• Airport passenger demand and capital needs: Higher oil prices driving fare increases could soften passenger demand. Debt issuance is expected to remain elevated in 2026 for terminal expansions and modernization.
• Toll road traffic and revenue growth: Traffic demand is stable-to-improving. Historical data demonstrates higher gas prices don’t have material impact on driving patterns. Higher toll rates significantly drive revenue growth.
• New tax revenue for mass transit: Ridership is unlikely to return to pre-pandemic levels. Required financial support from state and local governments will likely strain already pressured budgets.

Muni sectors at a glance

SECTOR	CREDIT FUNDAMENTALS	CREDIT MOMENTUM	KEY TAKEAWAY
State & local governments			Steady tax revenue growth and strong reserves provide cushion against possible economic slowdown and federal policy uncertainty.
Education			Declining demographics, affordability and federal policy changes are pressuring revenue at the same time inflation is increasing expenses. Large universities will be able to navigate, smaller colleges likely to struggle.
Transportation			Airport cash balances are healthy and passenger demand remains well above pre-pandemic peak levels, providing a cushion again emerging uncertainty driven by higher oil prices could impact travel. Capital investment needed to expand capacity.
Housing			Need for affordable housing bolsters demand. Labor supply constraints due to immigration policy shifts may delay projects.
Water and sewer utilities			Essential service, monopolistic providers with robust liquidity will continue to require significant capital investment.
Health care			Elevated labor and supply costs are normalizing. Most hospitals will adapt to federal Medicaid policy changes coming in 2027. Smaller, rural hospitals may struggle.
Source: Nuveen as of 31 May 2026. Certain statements may be deemed forward-looking statements. Please note that any such statements are not guarantees or intended to constitute a prediction of any future performance; actual results or developments may differ materially from those projected.