AUSTIN, Texas - (Business Wire) In the course of surveillance, Fitch Ratings affirms its 'BBB+' rating for the Prosper Independent School District, Texas' (the district) unlimited tax bonds. This action applies to the district's $76.2 million in series 1998, 2004, 2005 and 2006 bonds outstanding that Fitch presently rates. The Rating Outlook is Stable.
The 'BBB+' rating reflects the district's strong financial profile despite the pressures associated with rapid enrollment growth, very high debt levels, and healthy tax base gains. Prosper ISD has managed to increase operating reserves each of the last five fiscal years, and the general fund balance now approaches one-year's expenditures. Enrollment is projected to more than double within five years, which will maintain the need for additional facilities and staff. While the district's high debt levels are mitigated to a degree by wealth levels that are well above average, Fitch still views the debt burden as a negative credit factor.
The district serves western-central Collin County and a portion of Denton County and is approximately 20 miles north of Dallas. Debt ratios continue to climb as borrowings continue, and Fitch has noted the extremely large debt burden as its principal credit concern in previous reports. Due to rising debt service costs and the expectation of additional debt, the district's debt service tax rate likely will remain at or near the state's $0.50 maximum debt service tax rate test for new debt offerings.
Operating margins continue to improve despite increases in general fund expenditures averaging 13% annually since fiscal 2003. In fiscal 2007 the district's general fund reported net income of $5.6 million and an unreserved balance of $13.5 million, or more than 90% of spending. Fiscal 2008 results are expected to include another sizeable surplus of up to $5 million, and a corresponding increase in reserves.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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
Steve Murray, +1-512-215-3729 (Austin)
Gabriela Quiroga, +1-512-215-3731 (Austin)
Cindy Stoller, +1-212-908-0526
(Media Relations, New York)
