Fitch Ratings believes a state district court ruling earlier this month that Texas' school finance system is unconstitutional may ultimately result an increased funding and financial flexibility for school districts in the state, strengthening their credit profile.

The judge found the current funding formula "inefficient, inequitable, and unsuitable and arbitrarily funds districts at different levels below the constitutionally required level of the general diffusion of knowledge." The ruling also cites inadequate funding as a flaw in the current system that violates the state constitution.

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