On Oct. 14, Austin Independent School District received a AAA bond rating by the bond rating agency KBRA, making the central Texas ISD the first in Texas to receive two AAA ratings. Previously, Moody’s had given Austin ISD a AAA rating.
A AAA rating, the highest a school district can achieve, indicates the lowest risk of default and ensures that the district will get the lowest interest rates when taking on debt, saving taxpayers money.
“A bond rating is equivalent to an individual credit score,” said Eduardo Ramos, Chief Financial Officer, Austin ISD. “The higher your credit score, the better the auto loan you get. Having the highest bond rating will save millions of dollars in interest rate costs. This is a huge opportunity for the district in ensuring we receive the lowest financing costs when we sell future bonds.”
KBRA’s Rating Report stated that Austin ISD’s AAA rating “reflects strong financial management policies and practices and an experienced leadership team, as evidenced by the management team’s ability to successfully navigate through the COVID-19 pandemic despite the need to remit local tax revenues to the State as part of the States’ education funding redistribution scheme.”
Additionally, KBRA called out the district’s “highly conservative debt profile,” “excellent financial management practices,” and its reserve policy to keep at least 20% of its general fund budget in an unassigned fund balance, “a level that KBRA considers to be excellent.”
Austin ISD’s challenges include recapture, which KBRA called “a primary challenge for AISD achieving balanced operations,” and enrollment, which was showing “indications of stabilization.” Austin ISD, noted KBRA, “is actively attempting to reclaim unenrolled students by modernizing school facilities.”
“Management notes that modernized campuses have successfully attracted students and that reclaiming students is a key goal of the 2022 bond program through the potential modernization of further campuses.”