Fitch Rates Wylie ISD, Texas School Bonds 'AAA/A' Underlying.

AUSTIN, Texas -- Fitch Ratings assigns an 'AAA' rating to $71.1 million of Wylie Independent School District (the district), Texas unlimited tax school building bonds, series 2005, scheduled to be sold via negotiation to a syndicate led by First Southwest Company on July 21. The 'AAA' rating is based on the guaranty by the Texas Permanent School Fund, whose insurer financial strength is rated 'AAA' by Fitch. The series 2005 bonds have also been assigned an 'A' underlying rating. Additionally, Fitch has affirmed the underlying 'A' rating on the district's $233.9 million in outstanding unlimited tax bonds. The Rating Outlook is Stable.

The bonds are payable from an unlimited ad valorem tax levied against all taxable property within the district. Bond proceeds will be used for construction and equipping of school buildings, purchasing buses and land, and paying costs of issuance.

The district's underlying 'A' rating reflects stable financial operations despite growth pressures, adequate fund balance levels, and experienced management. The district has a strong management staff and enjoys community support for its bond programs and is supported by its continued growth in taxable assessed values (TAVs). Credit concerns include the district's exceptionally high debt burden and growth-related capital pressures. Recent and anticipated growth, as well as favorable finances, somewhat mitigate concerns over the district's debt load.

The district is located in Collin County, 23 miles northeast of Dallas and within commuting distance of the cities of Plano, Garland, and Richardson, as well as downtown Dallas. The northern expansion of the Dallas-Fort Worth metroplex over the past decade has produced steady population and student enrollment increases in the district. The economic base of the district is shifting from an agricultural area to one with an emphasis on residential, commercial, and light manufacturing usage.

TAV increases have been dramatic, averaging nearly 34% annually since 1998 and recording a gain of 20% in 2005. Enrollment growth has averaged 13% annually over the past five years. The growing saturation of the larger neighboring communities of Plano, Richardson, and Garland will likely result in the continued development of Wylie, as evidenced by the 8.1% average annual increase in home values from fiscal years 1995-2003. Furthermore, the widening of State Highway 78 will improve access to the area. County wealth levels are above those of the state and nation.

Direct debt ratios are very high at $11,000 per capita and 16% of TAV, after factoring in state aid of approximately 13% of outstanding debt. Despite anticipated population and TAV growth, debt levels are expected to remain high for the foreseeable future. The current offering represents the second installment of the $148 million authorization approved by 56% of voters in May 2004 to meet ongoing rapid enrollment growth needs.

Financial performance is consistent and adequate. The district's general fund reserve level increased slightly from 8.5%, or one month of expenditures and transfers out, in fiscal 2003 to 10.3%, or 38 days of expenditures and transfers out at the end of fiscal 2004. These levels remain below the fund balance policy of two and one-half months. Fiscal 2005 was the district's first year at the $1.50 operations and maintenance tax rate cap.

Fitch's rating definitions are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies, and relevant policies and procedures are also available from this site, at all times. This document will remain on the public site for seven days.