Pflugerville Independent School District, TX GO Debt Rating Raised To 'AA+' From 'AA' On Stronger Economic Metrics


DALLAS (S&P Global Ratings) March 14, 2019--S&P Global Ratings has raised its 
underlying rating on Pflugerville Independent School District (ISD), Texas' 
existing general obligation (GO) debt to 'AA+' from 'AA'. At the same time, 
S&P Global Ratings assigned its 'AA+' long-term rating to the district's 
series 2019A unlimited-tax school building bonds and series 2019B 
variable-rate unlimited-tax school building bonds. The outlook is stable.

"The upgrade reflects our view of the district's significant economic growth 
over the past five years, which has led to stronger economic metrics," said 
S&P Global Ratings credit analyst Daniel Golliday.

Over this period the district's market value per capita improved to extremely 
strong from adequate, which helped support sustained reserve growth to levels 
that we consider very strong. The district's advantageous location within the 
broad and diverse Austin-Round Rock-San Marcos metropolitan statistical area 
has resulted in 76% growth in assessed value in the past five years, 
translating into healthy operating revenue growth. In addition, the district's 
strong management practices--reflected through conservative budgeting--has 
historically yielded consistent and positive finances. Furthermore, the 
district's long-standing financial policies have served as a budgeting blue 
print that have allowed the district to mitigate potential budgetary pressures 
associated with growth-related needs.

Pflugerville ISD, which serves an estimated population of 136,095, is in 
northeast Travis and Williamson counties and covers approximately 77 square 
miles.

The stable outlook on the 'AA+' rating reflects our opinion that the 
district's diverse and rapidly growing tax base, stemming from an improving 
economy, will continue, and that school officials will manage growth-related 
expenditures and future recapture payments in a way that will maintain the 
district's very strong financial and reserve position. Given this, we do not 
expect to change the rating during the two-year outlook period.

All else remaining equal, we could raise the rating if the district's overall 
net debt burden moderates, coupled with the expansion of the tax base leading 
to economic metrics similar to those of higher-rated peers.

We could lower the rating if the district is unable to manage its 
growth-related needs, resulting in a structural imbalance or material decline 
in reserves below what we consider very strong levels. In addition, we could 
lower the rating if additional debt issuances outpace the rate of tax-base 
growth, resulting in a significant increase in the district's overall debt 
burden that is no longer offset by the strengths of its financial position and 
economic metrics. We will continue to assess the potential effect of changes 
to the current state school funding mechanism and weigh whether the district 
is adversely affected.  
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