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SISD authorizes the sale of school bonds |
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Written by Ron Howell
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Saturday, 15 March 2008 |
At its recent meeting, the Sweetwater ISD board of trustees unanimously authorized the sale of $12.8 million in school building bonds after hearing a favorable report on the SISD's credit rating from investment banker Leon Johnson of Dallas-based Southwest Securities, Inc.
Trustee Bryan Studdard made the motion to authorize the bond sale and received a second from fellow trustee Wes Bishop.
The vote came after the board listened to a report from investment banker Leon Johnson of Dallas-based Southwest Securities, Inc. Johnson told board members that, based on its stable outlook, Sweetwater ISD had received a favorable report on its long-term and school issuer credit ratings from the Standard & Poor's service.
According to the Standard & Poor's report, the SISD was assigned an AAA program rating and BBB issuer credit rating, or ICR, on its series of 2008 unlimited-tax general obligation bonds. The program rating reflects the district's eligibility for, and participation in, the Texas Permanent School Fund bond guarantee program, which provides the security of a permanent fund of assets that management can use to meet debt service on bonds guaranteed by the program.
The S&P analysis said the ICR reflects the district's primarily rural economny with low income levels; above-average property tax base concentration from wind energy-related developers; and high overall net debt burden per market value.
But it said those credit factors are offset, in part, by the district's stable financial position with good reserves, and by limited additional capital needs.
The district's unlimited ad valorem property tax pledge secures the bonds. Officials will use bond proceeds to improve various school facilities — something voters in the district approved by a nearly 3-1 margin in an election held this past November — and to refund $3.2 million of outstanding general obligation bonds.
The S&P report said the SISD's stable outlook "reflects the district's historically rural economy with wind farm development that should continue."
In addition, it said the stable outlook "reflects our expectation that the district will continue to maintain adequate reserves and closely monitor enrollment trends."
S&P said the district's limited additional capital needs and steady assessed value growth will help moderate the currently high overall debt burden per market value.
Further rating improvement, according to S&P, is contingent on a deepening and broadening economic base.
The report noted that enrollment in the SISD had increased by 5 percent in the last three years to 2,322 students, reversing a seven-year trend which saw enrollment decline by 21 percent to 2,202 students.
According to the report, district officials estimate the expanding energy-related sector will help increase enrollment by 3 percent annually over the next three years.
S&P said the SISD's "historically balanced operations and healthy reserves" reflect its sound financial position.
The report also noted the following:
— The SISD has steadily added to its unreserved fund balance over the past three years with an unreserved fund balance of $3.8 million — 24 percent of expenditures — for fiscal 2007.
— To address declining enrollment and the operational pressures associated with the decline, district officials reduced staff through attrition four years ago, while a strategic planning committee recommended the consolidation of the district's three elementary schools into two, reflecting a $200,000 savings annually. Also, the report said local officials expect to run balanced operations for the fiscal 2008 year.
— Due to changes in Texas school funding, the fiscal 2008 operations and maintenance tax rate decreased by 33 cents to $1.04 per $100 of assessed value, while the debt service tax levy is eight cents and the total property tax is $1.12 per $100 of assessed value.
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Last Updated ( Monday, 17 March 2008 )
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