KBRA Assigns Ratings to Ysleta Independent School District, TX Unlimited Tax Refunding Bonds, Series 2026A and 2026B (A Rating) and Maintenance Tax Notes, Series 2026 (A-); Outlook is Stable
13 Nov 2026 | New York
KBRA assigns a long-term rating of A to the Ysleta Independent School District's, TX (the "District" or "YISD") Series 2026A Unlimited Tax Refunding Bonds, Series 2026B Unlimited Tax Refunding Bonds, and to parity outstanding unlimited tax general obligations (collectively, the "Unlimited Tax Obligations'). KBRA additionally assigns a long-term rating of A- to the Series 2026 Maintenance Tax Notes ("Limited Tax Obligations"). The rating Outlook is Stable.
Proceeds from the Series 2026A and Series 2026B Unlimited Tax Refunding Bonds will be used to refund a portion of the District's outstanding parity unlimited tax obligations and pay costs of issuance. Proceeds from the 2026 Maintenance Tax Notes will fund varied maintenance expenses of the District and pay costs of issuance.
The District's Unlimited Tax Obligations are voter-approved obligations of the District, secured by a direct and continuing pledge of ad valorem taxes ("I&S tax") levied on all taxable property within the District, without limitation as to rate or amount. The Limited Tax Obligations are direct obligations of the District, secured by available funds of YISD, including the annual ad valorem maintenance tax (“M&O tax”) levied against all taxable property within the District, subject to the limitations of the maintenance tax authority as prescribed by law.
Key Credit Considerations
The rating was assigned because of the following key credit considerations:
Credit Positives
- Strong growth in the property tax base supporting the ad valorem tax pledge.
- Moderate direct debt burden, as measured by total debt service and fixed costs relative to total governmental expenditures.
- FYE 2026 preliminary results ahead of budget as the District’s financial stability plan begins to take effect, with a return to general fund budget balance projected by FYE 2028.
Credit Challenges
- Structural general fund budget deficits since FY 2023, with insufficient cost reductions to offset the enrollment and revenue decline.
- Significantly reduced general fund reserves, with the unassigned fund balance down more than 75% since FY 2021, to approximately 4.5% of general fund expenditures for FYE 2026 (unaudited), with downward pressure projected through FY 2027.
- Comparatively weaker sociodemographic characteristics of the District relative to the State and El Pase County.
Rating Sensitivities
For Upgrade
- Financial results that materially exceed budgeted performance, alleviating the structural budget deficit and rebuilding general fund reserves.
- Significant growth in the property tax base boosting the ad valorem tax receipts and increases reserves.
For Downgrade
- An inability to achieve and maintain structural general fund balance by FYE 2028, necessitating the continued issuance of short-term borrowings (TRANs) to support operating cash flows.
- A sustained decline in the ad valorem tax base and/or enrollment that exacerbates the general fund budget deficit and pressures general fund reserves.
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