Published: August 23, 2010
Fitch Rates Roma ISD, TX ULT Bonds 'AAA' PSF; 'A+' Underlying
NEW YORK - (BUSINESS WIRE) - Fitch Ratings assigns an 'AAA' rating to the following Roma Independent
School District, Texas' (Roma ISD or the district) unlimited tax (ULT)
bonds based on a guarantee provided by the Texas Permanent School Fund
(PSF), whose Insurer Financial Strength is rated 'AAA' by Fitch:
--$11.035 million ULT school building bonds, series 2010.
In addition, Fitch assigns an underlying 'A+' rating to the series 2010
bonds. The series 2010 bonds are expected to sell via negotiation on
Aug. 25, 2010.
Fitch also affirms the district's underlying rating on the following
bonds:
--Approximately $61.3 million in outstanding ULT bonds at 'A+'.
The Rating Outlook is Stable.
RATING RATIONALE:
--Roma ISD employs sound financial management evidenced by favorable
financial performance and solid general fund balance reserve levels.
--The district is a low property wealth district and as a result,
benefits from substantial state support for operations and debt service.
--The district's limited tax base is highly concentrated in oil and gas
production, and fluctuations in energy prices creates some volatility in
property values, as evidenced by the recent drop in taxable assessed
valuation (TAV).
--The district enjoys strong voter support for operating levy increases
as well as debt to fund capital needs.
--Debt levels are moderate after adjusting for substantial state support
and no additional borrowing is planned, although amortization is slow.
KEY RATING DRIVERS:
--Maintenance of healthy general fund reserves is an essential credit
consideration.
SECURITY:
The bonds are secured by an unlimited ad valorem tax pledge of the
district. In addition, the series 2010 bonds are secured by the Texas
PSF guarantee.
CREDIT SUMMARY:
Roma ISD is located in south Texas in Starr County along the
U.S.-Mexican border. The sparsely populated 490-square-mile county has
experienced modest population growth in recent years. Enrollment has
modestly increased at an annual average rate of approximately 1% since
2004 but is projected to accelerate to 3% annually for the next 2-3
years. District officials report a recent upswing in enrollment as
families relocate to the district due to economic and safety concerns in
Mexico. The county's economy is limited and based on agriculture and
mineral production, including natural gas. Typical of many Texas border
communities, unemployment rates are high and wealth indicators are well
below state and national norms.
Accounting for a large portion of its tax base, mineral values have
demonstrated volatility over the last several fiscal years, affecting
Roma ISD's TAV; the district anticipates a moderate decline in TAV for
fiscal 2011. Additionally, there is considerable concentration among the
district's top 10 taxpayers, which comprise nearly 40% of the district's
TAV. As a low property wealth district, Roma ISD receives substantial
state funding support for operating and debt service support, which
helps to buffer the district somewhat from fluctuations in mineral
values.
State program revenues provide about 80% of operating revenues. Sound
financial management is evidenced by the district's healthy reserve
levels, which have also improved as a result of a significant $0.13 per
$100 TAV tax levy hike approved by voters in fiscal 2008, the maximum
allowed by state law. Audited fiscal 2009 results show an approximate $2
million operating surplus, increasing the unreserved general fund
balance to a large $21.2 million or 42% of expenditures and transfers
out. Fiscal 2010 results will reflect a modest drawdown of general fund
reserves, decreasing the unreserved general fund balance to roughly $19
million-$20 million or about 35% of budgeted expenditures. The small
drawdown is reportedly due to capital expenditures associated with an
upcoming replacement of the district's early childhood education center.
The district anticipates adopting a balanced budget for fiscal 2011 by
Aug. 30.
This issuance comprises the last installment of the $26 million
authorization approved in May 2007 by a strong 82% voter majority.
Proceeds will be used to construct a replacement building for the
district's early childhood education center. The district's direct debt
burden on a per capita basis is about average at approximately $752 per
capita and 2.4% of market value, after adjusting for state support for a
very high 89% of the district's outstanding debt. Overall debt levels
are moderately higher at $1,171 per capita and 3.7% of market value.
Principal amortization is slow at 33% in 10 years. District facilities
are relatively new or have been recently renovated and officials cite
that sufficient capacity is available to accommodate projected
enrollment growth. As a result, there are no additional borrowing plans.
Additional information is available at 'www.fitchratings.com'
In addition to the sources of information identified in the
Tax-Supported Rating Criteria, this action was additionally informed by
information from Creditscope, University Financial Associates,
LoanPerformance, Inc., IHS Global Insight.
Related Research:
--'Tax-Supported Rating Criteria', dated Aug. 16, 2010.
--'U.S. Local Government Tax-Supported Rating Criteria', dated Dec. 21,
2009.
For information on Build America Bonds, visit www.fitchratings.com/BABs.
Related Research:
Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=548605
U.S. Local Government Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=492470
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE.
Fitch Ratings
Primary Analyst
Jaissy A. Lorenzo,
+1-212-908-9167
Analyst
1 State Street Plaza
New York, NY
10004
or
Mark Campa, +1-512-215-3727
Senior Director
or
Committee
Chairperson
Jose Acosta, +1-512-215-3726
Senior Director
or
Media
Relations
Cindy Stoller, +1-212-908-0526, New York
cindy.stoller@fitchratings.com
Copyright © 2012, Business Wire, Inc., All rights reserved.
Copyright © 2012, NewsBlaze,
Daily News
Search News
