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Moody's Investors Service Inc.

Moody's Affirms Van Alstyne Independent School District's A1 Issuer and GOULT Ratings with Stable Outlook

Strategic Insights

— 2 min read

The Van Alstyne Independent School District in Texas has seen its A1 issuer and general obligation unlimited tax (GOULT) ratings affirmed by Moody's Investors Service. Concomitantly, a stable outlook has been assigned to the district, while an A1 underlying and Aaa enhanced rating has been assigned to the district's Unlimited Tax School Building Bonds, Series 2025. The district's post-issuance debt outstanding will be approximately $261 million.

Key Takeaways:

  • The A1 issuer rating reflects the district's significant long-term liabilities and fixed costs resulting from growing capital needs due to enrollment growth.
  • The district's long-term liabilities will reach approximately 700% of fiscal 2025 adopted revenue, though this moderates to 612% based on projected revenue growth in fiscal 2026.
  • Leverage will remain high given additional issuance plans, but the district's financial reserves are likely to remain above 30% of revenue, which is in line with A1 peers.
  • The A1 rating on the district's GOULT bonds is at the same level as the issuer rating, reflecting the unlimited property tax dedicated to debt service.
  • The Aaa enhanced rating is based on the rating of the Texas Permanent School Fund (PSF) and the structure and legal protections of the transaction which provide for timely payment by the PSF if necessary.
  • The stable outlook reflects the expectation that significant economic, enrollment, and revenue growth will keep the high leverage ratios manageable, as well as the expectation that management will continue to budget conservatively and maintain healthy reserves in line with similarly rated peers.
  • Factors that could lead to an upgrade of the ratings include a trend of increasing reserves relative to revenues in conjunction with a return to balanced financial operations in the debt service fund and sustained moderation of long-term liabilities below 400% of revenue.
  • Factors that could lead to a downgrade of the ratings include operating deficits leading to declines in financial reserves below 25% of operating revenue, maintenance of long-term liabilities ratio above 700% on a forward-looking basis, and rating downgrade of the Texas Permanent School Fund.

Statistics:

  • The district's long-term liabilities will reach approximately 700% of fiscal 2025 adopted revenue.
  • Leverage will remain high, but the district's financial reserves are likely to remain above 30% of revenue.
  • Post-issuance, the district's debt outstanding will be approximately $261 million.
  • The district's enrollment was 2,653 in 2025.
  • Resident incomes are almost 147% of the national average.
  • The Aaa enhanced rating is based on the rating of the Texas Permanent School Fund (PSF), which is Aaa stable.

Sources:

  • Moody's Investors Service
  • US K-12 Public School Districts methodology published in July 2024
  • Guarantees, Letters of Credit and Other Forms of Credit Substitution Methodology published in July 2022
  • https://ratings.moodys.com/rmc-documents/425431
  • https://ratings.moodys.com/rmc-documents/386295

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