Brownsville ISD, TX $36.8M Bonds Rated `A' by Fitch IBCA.

NEW YORK--(BUSINESS WIRE)--Aug. 25, 1999--

Fitch IBCA assings its 'A' rating to Brownsville Independent School District, TX's $36,805,000 unlimited tax school building bonds, series 1999, which are scheduled to be sold competitively on Aug. 31. Dated Aug. 15, the bonds mature Aug. 15, 2000-2029. Bonds maturing on or after Aug. 15, 2010 are subject to optional redemption on Aug. 15, 2009. The bonds are direct obligations of the district and are payable from unlimited ad valorem taxes. The bond proceeds will be used for constructing and equipping school facilities, acquiring site, and paying for issuance costs.

Brownsville Independent School District's (ISD) underlying 'A' rating reflects its strong financial operations, international economy, and rising debt burden as it begins addressing deferred capital needs. The outlook on the district's unlimited tax debt is stable. Strong growth in the region's import/export economy continues to attract jobs and investment, although district enrollment pressures seem to be moderating. The current building program will begin addressing many deferred capital needs without straining taxpayers. Although the district contributed a combined $13 million from operations to the capital program in fiscal 1998 and fiscal 1999, financial reserves remain solid and should benefit from continued growth in assessed values and state aid. Additionally, stabilizing enrollment patterns should somewhat curtail ongoing operating and capital pressures.

Located on the Rio Grande and primarily serving the City of Brownsville, the district is influenced greatly by its proximity to Mexico. The area continues to benefit from a growing number of maquiladora projects, wherein Mexican-assembled goods are warehoused in and distributed through U.S. border towns, benefiting tax and employment bases and attracting continued residential development. This commercial and residential infusion has historically facilitated steady enrollment growth in the district, creating capacity pressures at many of its campuses. However, a shift in residential development patterns to surrounding districts, as well as changing immigration patterns from Mexico, have resulted in a static student population in recent years.

This is the second issue of a $100 million authorization approved in November 1997. Monies will be used to expand and renovate existing facilities and construct several new campuses, partially addressing deferred capital maintenance, allowing removal of nearly 200 of the district's approximately 500 portable classrooms, and providing sufficient capacity for future enrollment growth.

Overall debt burden, including this issue, is a moderate $890 per capita and 4.9% of market value, reflecting the district's historical reliance on pay-as-you-go capital financing. However, receipt of substantial instructional facilities allotment funds from the state, equal to 83% of this issue's par amount, effectively decrease indebtedness to $44.5 million, compared to $75 million without this subsidy. Additionally, the district invested $13 million from its general fund balance in fiscal 1998 to guarantee that no tax increase would be needed for the capital program.

Financial results are strong, with consecutive operating surpluses over the past five fiscal years. Fiscal 1998 ended with a $30.5 million undesignated general fund balance, a solid 13% of expenditures. Although the $13 million segregation of fund balance somewhat diminished operating flexibility, financial reserves will remain solid and should benefit from continued taxable property growth and moderating enrollment trends.