The Frenship ISD on Monday received its latest credit rating on bonds worth $166.5 million from a company called Fitch Ratings. It's a AA-, which is a positive rating but Fitch warns of potential problems.
Frenship has borrowed money by selling bonds to investors, who in turn look to Fitch to see if the school district remains in a good position to pay its debts. For the most part, the answer is yes.
Frenship has cash reserves of at least 20%, and the tax base growth has been just more than 3%. However, Frenship has debt of $4,379 per capita, and Fitch calls it a high debt ratio. And, at a minimum, Frenship will take on $15.5 million of new debt this year for a new elementary school, which was authorized by voters in 2007.
All districts in Texas have struggled with the issue of state budget cuts, and for Frenship it represents $3 million in lost funding for fiscal year 2012. Frenship's current budget has a $763,000 deficit, according to Fitch.
Despite very real challenges, Fitch says "The Rating Outlook is Stable."
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