NEW YORK--()--In the course of routine surveillance, Fitch Ratings has taken the following action on Weimar Independent School District, Texas' unlimited tax bonds:
--$5.6 million unlimited tax school refunding bonds outstanding affirmed at 'A+'.
The Rating Outlook is Stable.
RATING RATIONALE:
--Slow but steadily growing assessment base with
above average concentration.
--Financial operations are solid, characterized by consistent operating surpluses and sizable unreserved fund balances.
--Low debt load as the district has only two bond issues outstanding. Debt levels will remain below the norms even with the issuance of proposed new bonds.
--The district, situated in south central Texas, is lightly populated and rural with a limited economy and employment base.
KEY RATING DRIVERS:
--Maintenance of substantial financial reserves.
--Stability
of the district's tax base.
SECURITY:
The bonds are direct obligations of the district payable
from a continuing direct annual ad valorem tax levied by the district
without limit as to rate or amount.
CREDIT SUMMARY:
The district encompasses 173 square miles in south
central Texas, about 90 miles west of Houston. Situated mostly in
Colorado County, the district's boundaries also reach into LaVaca and
Fayette counties. With a 2010 population of 4,500, district population
growth has been stagnant, increasing by only 5% over the past 10 years.
Enrollment ranges from 500 to 600 students annually which represent a
drop of about 10% to 15% from levels reported in the early and
mid-2000s. The economy is largely agricultural, with some manufacturing
and oil and gas drilling activity. The city of Weimar (population 2,019)
serves as the commercial center for the surrounding area. The leading
employer is UTEX Industries, which employs nearly 300 and produces
rubber gaskets and seals for the oilfield industry. Other leading
employers include the district, a regional farm supplier and a sausage
producer. Colorado County wealth values are well below the state and
national averages. While limited, the area economy was not hit as hard
by the last recession as other sections of the nation. County
unemployment rates are below the national averages and the district's
tax base continues to expand. The presence of the agricultural and
energy sectors provided a measure of economic stability to the region.
Debt levels are very low as the district last issued bonds in 2005. Total debt to full value and total debt per capita of 0.9% and $1,501, respectively are well below average. The district is holding a bond referendum in May 2011 to issue approximately $4.7 million of bonds for a replacement cafetorium, new classrooms and a career facility. Even with the additional obligations, debt to full value would be a still-low 1.6%. Bond amortization rates are slightly below average with 44% of principal retired within the next 10 years. Debt service costs to expenditures are manageable at 7.8%. The district receives no state funding support for debt service.
Financial operations are solid as exhibited by consistent operating
surpluses and ample reserves. Property taxes constitute about half of
all district revenues. After a large general fund operating surplus in
fiscal 2008, operating margins narrowed over the next two fiscal years
but remained positive. Unreserved general fund balance was $2.4 million
at the end of fiscal 2010 or 44% of spending. This exceeds the
district's minimum reserve target of three months of expenditures.
Healthy liquidity levels are maintained as fiscal 2010 general fund cash
covers general fund liabilities by over 4.5 times. The district budgeted
a $129,000 or 2.3% general fund operating deficit for fiscal 2011,
holding revenues to prior year levels while increasing operating costs
by 2.5%. The district historically budgets conservatively and officials
expect fiscal 2011 general fund results to be balanced.
The
district's tax base has exhibited sustained growth over the past five
years, increasing at an average annual rate of 3.8%. The only exception
was a marginal drop of less than 1% in fiscal 2009 due to an increase in
exemptions. Officials expect assessments to be flat or increase slightly
over the next three years. While the tax base is mildly concentrated as
the top 10 leading taxpayers comprise 15.5% of total values, no one
taxpayer accounts for more than 4% of total assessments and the top 10
represent a diversity of industries.
The district's pension liabilities are limited to its participation in the state pension plan (TRS). The district's annual contribution to TRS, which is determined by state law, was $30,365 in fiscal 2010, or a miniscule 0.5% of total spending. Using Fitch's more conservative 7% discount rate (1% below the actual assumed rate), the district's contribution would increase to $33,705 or 0.6% of expenditures. The district also contributes to the state-run post-employment healthcare plan. The district's contribution for fiscal 2010, which is also determined by statute, was $20,873 or 0.4% of total spending.
Additional information is available at 'www.fitchratings.com'.
In addition to the sources of information identified in the Tax-Supported Rating Criteria, this action was additionally informed by information from Creditscope, University Financial Associates, LoanPerformance, Inc., IHS Global Insight, and National Association of Realtors.
Applicable Criteria and Related Research:
--'Tax-Supported Rating
Criteria', dated Aug. 16, 2010;
--'U.S. Local Government
Tax-Supported Rating Criteria', dated Oct. 8, 2010.
For information on Build America Bonds, visit 'www.fitchratings.com/BABs'.
Applicable Criteria and Related Research:
Tax-Supported Rating
Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=548605
U.S.
Local Government Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=564566
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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.
Facebook
Twitter
LinkedIn
Delicious
Reddit
StumbleUpon
Digg
MySpace
Newsvine
Google Bookmark
Yahoo! Bookmark
Email
Email 
