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 revenues up 5.1% in 1H25 vs 1H24. Governments are budgeting conservatively as they anticipate slower revenue growth.
• State rainy day funds: Median rainy day fund balances projected to reach 12.9% at end of FY26 up from prepandmic 9%.
• Unemployment: The U.S. unemployment rate was 4.3% in August 2025 but Fed cautious about labor market weakness.
• Economy: 1.5% GDP growth projected for 2025. 1.8% growth projected for 2026.
• Rating changes: Rating upgrades vs downgrades normalizing. Apart from downgrades linked to U.S. sovereign rating downgrade, 1:1 ratio in Q2 2025. Uptick in negative outlooks and downgrades for public K-12 school districts.
• Federal policy: Though federal aid is not a primary source of operating revenues for most issuers, the recent pullback in federal support for state and local governments across multiple fronts including Medicaid, transportation, disaster aid, SNAP and school funding will require greater independence and resiliency at the local level.

Higher education

• Enrollment: Fall 2024 enrollment grew 4.5% YOY, with total enrollment now exceeding pre-pandemic levels. Demographic challenges ahead as the number of high school graduates projected to decline. Targeted pressure on elite institutions has not seemed to negatively impact enrollment as applications continued to soar for fall 2025.
• Demographic trends: National decline in high school graduates projected to accelerate beginning in 2026.
• State funding: State fiscal stress precipitated by tariffs, waning pandemic aid, and future Medicaid cuts could leave less money for higher education.
• Endowment returns: 16.8% return on S&P for the 12 months ended 6/30/2025 should provide another favorable boost to endowments, following 11.2% average endowment return for FYE 6/30/2024..
• Federal policy: Changes to U.S. Department of Education and curtailment of federal loans will further heighten affordability concerns. Fewer federal grants threaten a secondary source of revenue to higher education. International student visa disruptions are more likely to negatively impact lower tier institutions that are already struggling financially and are heavily dependent on foreign students to pay full tuition.

Water and sewer utilities

• Liquidity: 541 days cash on hand (DCOH) median higher than pre-pandemic. Debt service coverage median rate holding steady at over 2.0x.
• Regulatory framework: Environmental regulation enforcement and implementation timelines have eased under the new administration. Systems have a few more years to comply with EPA regulations for PFAS and lead and copper levels, providing temporary capital relief. However, delaying implementation will likely result in higher costs which will eventually be passed onto consumers through higher rates and could pressure communities with limited resources.

Housing

• Strong demand: Need for more affordable housing in expensive markets supports ongoing construction.
• Increasing supply chain and labor costs: Tariffs anticipated to increase construction material costs. Builders are confident supply chains should hold up in the near-term, though at higher costs. Increased labor costs and shortages also expected due to immigration policy shifts. May result in project delays.
• Interest rates: Higher rates slow movement as current homeowners are reluctant to give up low cost mortgages though additional Fed cuts could change this dynamic in 2026.

Health care

• Staffing shortages: Demand for nurses during and right after the pandemic led to a spike in labor costs, leading to steep expense growth. Pace of labor inflation began to subside in 2023 and 2024, and margins have started to recover.
• Material cuts to Medicaid: Federal policy changes will reduce Medicaid payments to states. Medicaid is administered (and partially funded) by the individual states so the impact on individual providers is likely to vary widely. Small rural hospitals are considered more vulnerable to funding changes.
• Demographic trends: Aging population guarantees demand for services will grow. Sector will struggle to serve older, rural populations.

Transportation

• Airport strained capacity: Passenger travel growth expected to be constrained by slowdown in the economy, staffing issues for air traffic controls and geopolitical tensions.
• Airport passenger volume: Air travel demand softened in 2025 given economic uncertainty, but an acceleration in demand in 4Q may continue into 2026.
• Toll road traffic and revenue growth normalizes: Traffic demand is stable-to-improving, possibly helped by lower gas prices and more employees returning to office. Higher toll rates have been a significant driver of revenue growth.
• New tax revenue for mass transit: Ridership not expected to return to prepandmic levels. New financial support will likely need to come from state and local governments facing their own budgetary pressures.

Muni sectors at a glance

SECTOR	CREDIT FUNDAMENTALS	CREDIT MOMENTUM	KEY TAKEAWAY
State & local governments			Steady tax revenue growth and strong reserve periods provide cushion against possible economic slowdown and federal policy uncertainty.
Education			Pressure due to increased competition for students and affordability coupled with federal policy changes. 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. 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.