DALLAS – A growing number of Texas school districts are hitting their cap on the tax rate for operations and maintenance costs, which Moody’s Investors Services views as a negative credit factor because it limits their ability to raise revenues amid growing spending pressures.

“Once a district’s O&M tax rate hits the cap, enrollment growth becomes the primary driver of their revenue growth,” Moody’s analyst Kristin Button wrote in an Aug. 30 report. “Relying on enrollment growth could pose challenges for many school districts because there is no guaranty that enrollment will increase; enrollment is somewhat beholden to demographic shifts that are beyond the control of school districts.”

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