KBRA Assigns AAA Rating to Austin Independent School District's Unlimited Tax School Building Bonds, Series 2024 (PSF); Affirms Ratings for Outstanding Debt; Outlook is Stable
21 Mar 2024 | New York
KBRA assigns a AAA long-term rating with a Stable Outlook to Austin Independent School District’s ("AISD" or "the District") Unlimited Tax School Building Bonds, Series 2024 (PSF), and concurrently affirms the AAA rating and Stable Outlook for the District’s KBRA-rated Unlimited Tax School Bonds (PSF) and Unlimited Tax School Bonds (Non-PSF) outstanding.
The bonds are direct obligations of the District, payable from a direct and continuing pledge of ad valorem taxes on all taxable property within the District, without limitation as to rate or amount. KBRA understands that proceeds from the sale of the Series 2024 bonds will be used for the construction and acquisition of school buildings, upgrading technology systems, and for stadium improvements. The issuance was authorized by the electorate through a November 2022 bond election and subsequent bond order adopted by the District’s Board of Trustees.
The Stable Outlook reflects KBRA’s expectation that management will continue to effectively manage the District’s finances while balancing the need to remit tax revenues to the State, that the tax base will continue to grow, and that AISD’s overall net debt profile will remain conservative and well-managed while also addressing the capital needs of the District.
Key Credit Considerations
The rating actions reflect the following key credit considerations:
Credit Positives
- Strong financial management policies and an experienced, effective management team.
- A diverse and growing economic base with AV in the District’s boundaries having grown at a CAGR of 9.8% from FY 2015 through FY 2024.
- A highly conservative debt profile with a rapid amortization schedule, manageable long-term retirement liabilities (pension and OPEB), and moderate overall net debt burden.
Credit Challenges
- State recapture of the District’s tax revenues reflects over 50% of the District’s GF expenditures for FY 2022 and FY 2023.
- The District’s enrollment gradually declined in the 2010s and experienced a decline of 7.3% in SY 2020-2021. KBRA understands that AISD has early indications of stabilization in enrollment and is actively attempting to reclaim unenrolled students by modernizing school facilities.
Rating Sensitivities
For Upgrade
- Not applicable at AAA rating level.
For Downgrade
- While not expected a trend of decline in the ad valorem tax base may negatively impact the rating.
To access rating and relevant documents, click here.