The 'AAA' rating is based on a guarantee provided by the
The series 2014 refunding bonds are scheduled to sell as early as the week of
In addition, Fitch assigns an 'AA+' underlying rating to the series 2014 refunding bonds and affirms the 'AA+' rating on the district's
The Rating Outlook is Stable.
The bonds are direct obligations of the district, secured by an unlimited tax levied against all taxable property within its boundaries. The bonds are also insured as to principal and interest repayment from a guaranty provided by the PSF.
KEY RATING DRIVERS
STRONG AND STABLE FINANCIAL POSITION: The district's financial position is a credit positive, characterized by stable and sizeable reserve levels. Liquidity is also strong.
FAVORABLE ECONOMIC CONDITIONS: The district benefits from its proximity to the larger
FLAT TAX BASE; ENROLLMENT EXPECTED: The district's tax base is mature and predominantly residential; as such, taxable assessed valuation (TAV) and enrollment are projected to remain fairly flat over the near term.
GENERALLY POSITIVE DEBT PROFILE: Overall debt levels are moderately elevated. However, the district's direct debt profile is favorable given its above-average pace of principal amortization, flat to descending annual debt service payments, and remaining flexibility under the
SHIFT IN FUNDAMENTALS: The rating is sensitive to shifts in fundamental credit characteristics including the district's sound financial management practices. The district's history of maintaining solid reserves while addressing operating and capital needs supports expectations for rating stability.
The district is located in
STRONG FINANCIAL POSITION MAINTAINED
The district's financial position remains strong, characterized by stable and sizeable reserves that are typically in excess of the district's established policy to maintain a minimum of 20% of spending in general fund reserves. Actual financial performance generally outperforms budget due to management's conservative budgeting practices. Statewide funding cuts over the fiscal 2012 and 2013 biennium were proactively managed with corresponding budget cuts enabling the district to maintain structural balance and its historically strong reserve levels. The district ended fiscal 2013 with unrestricted general fund reserves at
A favorable economic climate and rising state revenue forecasts led state officials to restore some of the funding that was cut during the previous biennium. The district's state funding for fiscal 2014 was increased by an estimated
FAVORABLE DEBT PROFILE WITH MANAGEABLE NEEDS
Overall debt levels are above average at 5.7% of market value or roughly
The district's capital needs are manageable. Given the maturity of the district and modest growth rates, the capital needs are largely related to renewal and replacement of its aging facilities. The district sought voter approval for a
RETIREE LIABILITIES NOT A CREDIT PRESSURE
Retiree pension and healthcare benefits are provided to employees through the Teacher Retirement System of
Other post-employment benefit (OPEB) contributions paid by the district are nominal, as the state and employees also pay the bulk of these costs. Total pension and OPEB contributions made by the district in fiscal 2013 totaled a very low 1.1% of governmental fund expenditures. The state's payment of district legacy costs is a credit strength as it keeps overall carrying costs reasonable in the face of a high and potentially growing debt burden. Starting next fiscal year (2015) pension contributions for all districts in the state will rise to 1.5% on the statutory minimum portion of payroll from zero, increasing carrying costs. Increases in district funding requirements beyond fiscal 2015 could create additional budget pressure.
STABILITY IN ENROLLMENT, ECONOMY AND TAX BASE
County unemployment levels continued to decline as a result of expanded employment opportunities that outpaced labor force growth, consistent with the Dallas-Fort Worth MSA and the state. At 5.5% as of
The district is primarily residential in nature and serves as a bedroom community for the greater metropolitan area. Historically healthy tax base growth that averaged roughly 5% per annum flattened in fiscal 2010 and subsequently declined by a moderate 7% in fiscal 2011, due largely to weaker economic conditions. Growth resumed by fiscal 2012 but at a much more modest pace. For fiscal 2014, the district's TAV at
The judge agreed to reopen testimony after the
Additional information is available at 'www.fitchratings.com'.
In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope,
--'Tax-Supported Rating Criteria' (
--'U.S. Local Government Tax-Supported Rating Criteria' (
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria
Source: Fitch Ratings
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