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Moody's Investors Service Inc.

Moody's Assigns Aa3 Underlying and Aaa Enhanced Ratings to La Vernia ISD, TX Bonds

Strategic Insights

— 1 min read

La Vernia Independent School District in Texas has recently issued bonds, Series 2025, with a par amount of approximately $73.3 million. Moody's Investors Service has assigned Aa3 underlying and Aaa enhanced ratings to these bonds, citing the district's stable financial profile, growing tax base, and manageable debt levels. The district's history of maintaining a healthy available fund balance and growing enrollment has contributed to the positive ratings. Moody's also noted that the district's long-term liabilities and fixed cost ratios are elevated, but will remain manageable due to a growing tax base and defeasance plans.

Key Takeaways:

  • The Aa3 issuer rating reflects La Vernia ISD's history of maintaining healthy available fund balances and a growing tax base, with taxable values increasing 7% annually over the last five years.
  • The district's enrollment continues to increase, with a three-year compound annual growth rate (CAGR) of 2%, and this trend is expected to continue due to the strength of the local economy and ongoing residential construction.
  • The district's long-term liabilities and fixed cost ratios are elevated at 372% and 24%, respectively, but will remain manageable due to a growing tax base and defeasance plans.
  • Moody's maintains the district's Aa3 issuer and general obligation unlimited tax (GOULT) ratings, citing a stable financial profile and manageable debt levels.
  • 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.
  • Moody's currently rates the Texas Permanent School Fund Aaa stable.
  • The rating outlook for La Vernia ISD is neutral, with no assigned outlooks to local government issuers with less than $130 million in debt outstanding.

Statistics:

  • Enrollments in La Vernia ISD have increased at a three-year CAGR of 2%.
  • Taxable values have grown 7% annually over the last five years, reaching $1.9 billion as of fiscal 2025.
  • The district's long-term liabilities ratio is 372% of projected revenue.
  • The fixed cost ratio is 24% of projected revenue.
  • La Vernia ISD has approximately $129 million in debt outstanding.

Sources:

Moody's Investors Service, "La Vernia Independent School District, TX, Unlimited Tax School Building Bonds, Series 2025"

Moody's Ratings Methodologies, "US K-12 Public School Districts" (July 2024)

Moody's Ratings Methodologies, "Guarantees, Letters of Credit and Other Forms of Credit Substitution Methodology" (July 2022)

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