Standard & Poor's Ratings Services has raised its underlying rating (SPUR) on Galveston Community College District, Texas' series 2004 combined-fee revenue bonds to 'BBB+' from 'BBB'. The outlook is stable.

The upgrade reflects Standard & Poor's view of the district's consistently positive operations on a full-accrual basis despite multiple challenges in recent years, including the impact of Hurricane Ike, which struck Galveston in 2008, and cuts in state operating appropriations. Standard & Poor's also views the district's solid financial resources for the rating category and lack of new debt plans as positive rating factors.

"We expect that, over the two-year outlook time frame, the district will continue to post positive operating results on a full-accrual basis, stabilize enrollment, generate stronger debt service coverage on revenue bonds, and effectively manage through any future state appropriation cuts. The rating could come under pressure if there are large enrollment decreases, cuts in state operating appropriations that could pressure district operations, and deterioration in financial resource ratios relative to the rating category. Given this upgrade, we do not expect to raise the rating during the outlook time frame," said Standard & Poor's credit analyst Shivani Singh.

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