Press Release|Public Finance
KBRA Assigns AA- Rating with Stable Outlook to Canutillo Independent School District, Texas, Unlimited School Building Bonds, Series 2025
2 Jun 2025 | New York
KBRA assigns a long-term rating of AA- with a Stable Outlook to the Canutillo Independent School District, Texas, Unlimited Tax School Building Bonds, Series 2025.
Key Credit Considerations
Credit Positives
- The District’s strong growth trends in terms of population and tax base valuation due to its location along the important Interstate-10 corridor.
- Sound level of reserves with an unassigned fund balance ratio of 17.7% as of the end of fiscal year 2024.
- Experienced management team and sound polices to guide the District through current financial challenges.
Credit Challenges
- Stagnant enrollment and strong competition from neighboring districts which may increase with the implementation of Texas’ private school voucher program that may further syphon from the District’s student base.
- Stable revenue trend with limited flexibility to generate additional resources based on state school funding restrictions in the face of increasing expenses, resulting in recent operating deficits.
- Already high and increasing debt burden as District implements multi-year capital program to relocate and reconstruct its aging school infrastructure.
Rating Sensitivities
For Upgrade:
- Increased enrollment resulting in generation of additional revenues based on state’s per student funding formula producing consistent operating surpluses without the use of one-time revenues.
- Growth in reserves to a level that is consistently above District’s 90 days of expenditures policy target.
For Downgrade:
- Continued trend in operating deficits resulting in unassigned reserves falling below 10% on a sustained basis.
- Decreasing enrollment trend resulting from increased competition that erodes revenue generation and increases financial pressure on the District.
- Construction risk associated with current capital plan resulting in significant increased costs prompting need for additional debt beyond current authorization.
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