Fitch Rates Wylie ISD, Texas' $20.7MM ULT Bonds 'AAA' PSF/'A' Underlying.

AUSTIN, Texas -- Fitch assigns an 'AAA' rating to Wylie Independent School District, Texas' (Wylie ISD or the district) $20.7 million unlimited tax school building bonds, series 2007, based on the guaranty of the Texas Permanent School Fund, whose insurer financial strength is rated 'AAA' by Fitch. In addition, Fitch assigns an underlying rating of 'A' to the series 2007 and affirms the underlying 'A' rating to the district's approximately $229 million in outstanding unlimited tax bonds. The series 2007 bonds are scheduled for a negotiated sale the week of June 4, 2007 via a syndicate led by RBC Capital Markets. The Rating Outlook is Stable.

The bonds are direct obligations of the district, payable from and secured by an unlimited ad valorem tax levied against all taxable property within the district. Proceeds will be used to construct and equip school buildings, purchase necessary sites, and pay costs of issuance.

The underlying 'A' rating reflects Wylie ISD's rapid tax base with its prospects for continued growth, stable finances, and proximity to the diverse Dallas-Fort Worth economy. The rating also reflects the district's very high debt levels with additional borrowing planned, below average principal amortization, and ongoing operating and capital pressures associated with growth. The prospect for continued development appears promising, given ongoing and planned residential and retail projects, improvements to local transportation corridors, and available land. Current financial performance and expected tax base growth suggest the district will be able to maintain its financial profile satisfactorily over the near term.

Wylie ISD is located approximately 23 miles northeast of Dallas on Highway 78 in Collin County, serving primarily the city of Wylie. The northern expansion of the Dallas-Fort Worth metroplex over the past decade has produced substantial population growth in Collin County and the city of Wylie, as well as rapid student enrollment increases for the district. The city of Wylie's population has almost doubled since 2000 to an estimated 29,000 residents in 2005. Considered a fast-growth district, enrollment is currently estimated at slightly more than 10,000 students, having grown by an annual average of nearly 15% since 2002. Given the pace of development, officials expect current enrollment to eventually double at full build-out in the next 10-15 years. The economic base of the district is shifting away from an agricultural area to one with an emphasis on affordable residential with some commercial and light manufacturing. Tax base growth continues to outpace student enrollment gains at slightly more than 18% annually over the past five fiscal years. Many residents commute to work in the nearby cities of Dallas, Plano, Garland, and Richardson. The area continues to experience increased retail development with the growth of residential construction.

District debt levels are exceptionally high and are expected to remain so considering growth pressures, even after factoring in state support for a portion of existing debt service. The current offering is the final installment of a $148 million authorization approved by voters in 2004. Capital needs are expected to remain substantial over the near term and will require additional bond financing in the next two years if current enrollment growth rates are sustained according to district officials.

Despite the pressures associated with rapid enrollment growth, financial performance is stable and adequate. For fiscal year 2006, the district changed the start and end date of its fiscal year from August 31 to June 30, producing a 10-month audit that reflects a year's worth of revenues, but only a partial year of expenditures. As a result, $4.4 million was added to general fund balance in fiscal 2006, bringing the total to $10.6 million or 21.9% of spending. The district expects to add $1 million to general fund balance by the close of fiscal 2007.

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