Fitch Ratings said it has downgraded to AA-minus from AA Brownsville Independent School District, Texas's $166.1 million unlimited tax bonds, series 2001, 2005, and 2006.

The rating outlook is revised to stable.

The bonds are secured by an unlimited ad valorem property tax pledge. The bonds additionally carry a guarantee from the Texas Permanent School Fund (PSF), whose bond guaranty program is rated AAA by Fitch.

The key rating drivers supporting the downgrade are the significantly diminished fiscal cushion of the district and limited ongoing budget flexibility. A projected fiscal 2012 surplus would arrest the trend of significant draws on fund balance. However, the current level of available reserves, which Fitch expects to remain below the district's formal target, together with limited revenue raising ability and mixed economic base is more consistent with the lower rating.

The stable outlook reflects positive steps the district has taken to return to budgetary balance, including management of state aid cuts in fiscal 2012 and adoption of a fiscal 2013 balanced budget.

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