NEW YORK - Standard & Poor's Ratings Services said it raised its issuer credit rating (ICR) on Springtown Independent School District (ISD), Texas' GO debt two notches to A-minus from BBB due to the district's healthy assessed value growth and strengthened financial position. The outlook is stable.
The rating service also assigned its AAA program rating and A-minus ICR, and stable outlook, to the district's $7.845 million series 2007 unlimited-tax GO refunding bonds.
At the same time, Standard & Poor's affirmed its AAA program rating on the district's GO debt.
The enhanced program rating reflects the Texas Permanent School Fund's strength and liquidity.
The district's solid finances due primarily to the state's significant support of operations and debt service and limited additional capital needs support the ICR.
The district's shallow immediate economic base based primarily in the oil and gas industry and above-average debt burden, at 4% of assessed value, among similar-size school districts, coupled with an extended debt service schedule, offset, in part, these strengths.
Officials will use bond proceeds to finance a portion of the district's debt outstanding for savings.
"We believe district officials will be able to maintain the district's healthy financial position," said Standard & Poor's credit analyst Brian Marshall. "We also assume the district's capital needs will remain limited, allowing overall debt burden to stay manageable."
District assessed value has increased by an average of 11% annually since fiscal 2003 to $764 million in fiscal 2008 from $450 million due primarily to residential construction, modest commercial retail development, and property reappraisals. District market value is average at $42,445 per capita.
The district's financial position is growing stronger. The unreserved general fund balance increased by an average of 46.0% annually since fiscal 2003 to $5.8 million, or 27.9% of operations, in fiscal 2006 from $1.9 million. Healthy assessed value growth, good state support, and less-than-budgeted expenditures were the primary reasons behind the improved reserves. Management expects to end fiscal 2007 with a roughly $1 million operational surplus, and it has budgeted for break-even operations for fiscal 2008.
Net of state support (about 34% of debt service payments), the district's overall net debt burden is above average among similar-size school districts at 4% of market value. Debt service carrying charges were a moderate 6.9% of total expenditures for fiscal 2006. Amortization is extended with officials retiring just 73% of principal over 20 years and 100% by 2035.
The rating action affects roughly $33 million of debt outstanding.
