Fitch Ratings has assigned an AAA rating to Waxahachie ISDís $59.2 million tax school building bonds, series 2007.

This rating is based on a guaranty provided by the Texas Permanent School Fund, whose insurer financial strength is rated AAA by Fitch.

Fitch also assigned an A underlying rating to the series 2007 bonds and affirmed the underlying A rating on the districtís approximately $47.1 million in outstanding tax bonds.

The series 2007 bonds were set for a negotiated sale Jan. 17 via a syndicate led by First Southwest Company.

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. The bonds are further secured by the Texas Permanent School Fund guaranty. Proceeds will be used to finance various capital improvements and pay costs of issuance.

The underlying A rating is based on WISDís growing, diversified tax base, solid financial performance with substantial reserves, and historically manageable enrollment growth.

The rating also takes into consideration moderately high debt ratios, a slowing amortization rate, and operating/capital pressures associated with more rapid enrollment growth expected over the near term.

The district experienced unprecedented student enrollment growth in fiscal 2006, and anticipates a more rapid pace of enrollment growth due to ongoing residential development in the district. Maintenance of solid reserve levels remains key to future credit consideration, given challenges posed by expected population and enrollment growth.

WISDís proximity to the Dallas-Fort Worth Metroplex and its location along a major transportation route has fostered the development of a diverse manufacturing/industrial base. Affordable land and proximity to a large employment base have more recently spurred residential development primarily in the northern portion of the district, although estimates indicate only 30 percent of the district is built out.

It is expected that this trend will continue given ongoing and planned development.

The tax base composition that has been historically weighted toward the commercial sector continues to outpace student enrollment growth at slightly less than 11 percent annually over the past four fiscal years.

Enrollment growth has remained manageable at a five-year annual average of 2 percent; however, district officials indicate that they believe they are at the start of a fast-growth period for the district based on an unprecedented enrollment increase in fiscal 2006.

Demographers point to ongoing residential development that is expected to bring total student enrollment to slightly more than 10,000 by 2015, up from almost 6,300 presently.

The districtís recent trend of maintaining larger financial reserves continues to be a strength for the district, as the district has increased its total fund balance each year since fiscal 2002.

Results for fiscal 2006 were again positive with the general fund balance equal to slightly more than 31 percent of operating expenditures and transfers out.

The unreserved, undesignated portion represented almost 19 percent of spending. Officials expect to close fiscal 2007 with essentially breakeven results.

The current offering represents the entire authorization approved by 76 percent of the voters in November 2006.

The bond package will be used primarily for a new elementary school, a new sixth-grade center and a new junior high school, with the remainder for renovation and rehabilitation of existing schools.

The current authorization is expected to meet district facility needs through the latter part of 2008.

The current offering more than doubles the districtís debt while slowing repayment. As a result, district debt levels are moderately high. Direct debt to TAV is 4.6 percent and direct debt per capita is more than $3,400.

The districtís debt no longer receives substantial state support as in prior years. Overall debt ratios are higher, with debt to TAV and debt per capita at 7.9 percent and slightly more than $5,900, respectively.

Amortization of principal is slow; in five years, 13 percent of principal will be retired, and in 10 years, 18 percent will be retired.

Fitchís rating definitions and the terms of use of such ratings are available on the agencyís public Web site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site.

Sherry Lehman is a senior communications associate with Fitch Ratings.