Aug 29 - Fitch Ratings takes the following rating action on the Clint
Independent School District, TX (the district) bonds:
--Approximately $126 million unlimited tax bonds affirmed at 'AA-'.
The Rating Outlook is Stable.
The bonds are secured by revenues from an unlimited tax levied against all
taxable property within the district. The bonds, with the exception of series
2009, are additionally secured by the Texas Permanent School Fund, whose bond
guarantee program is rated 'AAA' by Fitch.
KEY RATING DRIVERS
STRONG FINANCIAL PERFORMANCE: The district consistently records operating
surpluses which has resulted in the steady growth of total general fund reserves
over the past five years. Management has demonstrated the ability to achieve
favorable financial results during periods of both rapid enrollment growth and
state funding reductions by aligning its expenditures with revenue levels.
TAX BASE GROWTH: New residential construction and commercial expansion have
offset valuation losses, contributing to overall tax base growth over the past
several years, albeit at a slower post-recession pace. The district resides on
the eastern boundary of El Paso County and is positioned to benefit from the
high growth of the region given its proximity to the city of El Paso, large land
mass, and low population density.
MANAGEABLE DEBT BURDEN: The district's overall debt is well above average in
relation to market value, although overall fixed costs (including debt service
and pension contributions, and OPEB) are low in relation to general fund
spending. State assistance currently funds approximately 70% of debt service
expenditures. Management does not anticipate issuing new debt in the near term
given the adequacy of existing infrastructure.
BELOW AVERAGE SOCIOECONOMIC PROFILE: The region's income levels are below
average, but have grown faster than state and national levels over the past five
years. Unemployment has improved from a year ago, but continues to exceed state
and national averages.
WHAT COULD TRIGGER A RATING ACTION
CONTINUED ECONOMIC EXPANSION: Continued development, expansion and diversity of
the local economy and tax base could lead to positive rating action.
GROWING UPPER RIO GRANDE DISTRICT
The district is located approximately 18 miles southeast of El Paso (rated 'AA'
with a Stable Outlook by Fitch) and encompasses Horizon City, the town of Clint,
and the unincorporated area of East Montana within its large 380-square mile
boundary. Ease of access to the city of El Paso and the Fort Bliss Air Defense
Training Center make the district's affordable housing a primary growth driver,
although the district's commercial base also reflects steady growth over the
past five years.
Taxable assessed valuation (TAV) grew by a compound annual average rate of over
10% since fiscal 2007, with a 6.4% gain in fiscal 2012 driven by a series of new
residential construction projects throughout the district. Fitch anticipates
further TAV gains in fiscal 2013 based on the level of construction activity
currently underway. The top ten taxpayers are represented by utility, real
estate, manufacturing, energy and construction interests with no taxpayer or
STRONG FINANCIAL PERFORMANCE
Management budgets conservatively and maintains a healthy level of reserves,
which Fitch considers prudent in light of the ongoing state budget
uncertainties. State funding contributed more than 75% of the district's
operating revenues over the past five years, followed by ad valorem tax revenues
and federal monies.
A fiscal 2011 operating surplus, net of transfers, of $2 million boosted the
unrestricted (total of committed, assigned and unassigned balances under GASB
54) general fund balance to $21.1 million (25.9% of general fund expenditures
and transfers out). The favorable performance reflected the benefit of
enrollment gains, attrition based cost savings, and use of non-recurring federal
American Recovery and Reinvestment Act (ARRA) monies.
Management projects a fiscal 2012 surplus of $1.2 million reflecting cost
savings, combined with enrollment based revenue growth and $1.8 million in
non-recurring EduJob monies which offset $3 million in state funding cuts. The
fiscal 2013 balanced budget includes conservative enrollment assumptions, the
second year ($2 million) of state funding cuts, and cost reductions to offset
both the cuts and the end of federal stimulus funding.
Federal funding sources and enrollment growth have allowed the district to make
up for state revenue shortfalls with modest cost reductions, avoiding staff
reductions (other than through attrition) in the fiscal 2012/2013 biennium.
Fitch considers it prudent that the district is positioned to make further cost
reductions based on school funding outcomes of the 83rd State legislative
MANAGEABLE DEBT BURDEN
The district's debt service payments are manageable at 12.4% of general fund
expenditures and transfers out, (4% of general fund expenditures considering
state debt service assistance). Metrics for overall debt outstanding are mixed,
with low debt per capita ($1,734) and high debt per market value (6.6%),
reflecting the limited tax base. With recently constructed school facilities,
the district reports adequate capacity for the next five years based on current
The district's pension liabilities are limited to its participation in the state
pension plan administered by the Teachers Retirement System of Texas (TRS). The
district's annual contribution to TRS is determined by state law, as is the
contribution for the state-run post-employment benefit healthcare plan.
Including debt service, pension and other post-employment benefit contributions,
payments on long-term liabilities are moderate at 14.6% of fiscal 2011 general
fund expenditures and transfers out.