NEW YORK--(BUSINESS WIRE)--KBRA assigns a long-term rating of AAA with a Stable Outlook to Dallas Independent School District, TX's (“DISD” or the “District”) outstanding Unlimited Tax School Building and Refunding Bonds. The long-term credit rating reflects the District’s strong financial management policies and practices guided by an experienced leadership team, favorable financial operating performance supporting solid reserve and liquidity levels, a mature and diverse economic base that has experienced continued growth, particularly in terms of its property taxing base, and what KBRA considers to be a well-managed and conservative debt profile. These strengths are counterbalanced, in part, by a continued trend of enrollment decline.
The Unlimited Tax Bonds are obligations of the District, payable from a direct and continuing pledge of ad valorem taxes levied on all taxable property within the District, without limitation as to rate or amount.
The Stable Outlook reflects KBRA’s expectation that management will continue to effectively manage the District’s finances while balancing the need to remit recapture revenues to the State, the tax base will continue to grow, and that DISD’s overall net debt profile will remain conservative and well-managed as the District addresses its capital needs though the anticipated issuance of additional debt obligations.
Key Credit Considerations
The rating assignment reflects 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 7.3% from FY 2012 through FY 2024.
- A conservative debt profile, manageable long-term retirement liabilities (pension and OPEB), and moderate overall net debt burden. KBRA expects that the District’s debt burden will remain moderate, even as its capital needs necessitate the issuance of additional authorized debt obligations.
Credit Challenges
- State recapture of the District’s tax revenues reflects 11.6% of the District’s GF expenditures for FY 2023.
- Continued declines in both enrollment and ADA. KBRA understands that DISD 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.
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Methodologies
- Public Finance: U.S. Local Government General Obligation Rating Methodology
- ESG Global Rating Methodology
Disclosures
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.
Doc ID: 1007053
