Moody's Investors Service said it has upgraded to Aa2 from Aa3 the underlying rating on Pearland Independent School District, Texas's general obligation debt.
Concurrently, it assigned an Aa2 rating to $30.7 million unlimited tax schoolhouse bonds, Series 2014. Debt service on the bonds and the district's outstanding parity debt is secured by an annual ad valorem tax, levied against all taxable property in the district without legal limitation as to rate or amount. Sale proceeds will fund improvements to existing facilities. The rating action affects approximately $321.5 million of outstanding parity debt, inclusive of the new series. The outlook remains stable.
The Aa2 reflects the district's well-managed financial operations, evidenced by five consecutive years of operating surpluses, which resulted in healthy reserves and ample liquidity. The rating is also based on the continuing trend of growth in the district's sizeable and diverse tax base, above average socioeconomic indices, and sustained enrollment growth. In addition, the rating incorporates somewhat elevated debt burden expected to moderate over time given no additional borrowing plans.
The stable outlook reflects the expectation that the district will continue to exhibit sound financial management and maintain a satisfactory general fund reserve levels, despite budgeted use of reserves. The stable outlook also incorporates our expectation that despite expected valuation growth, that the district's debt burden will remain high over the medium term.
