Dallas Independent School District receives AAA bond rating from KBRA

In November 2023, Kroll Bond Rating Agency (KBRA) assigned a long-term credit rating of AAA with a Stable Outlook to the Dallas Independent School District (DISD) in Texas. This decision reflects the District's strong financial management, marked by an experienced leadership team and solid financial performance characterized by high reserve levels and liquidity. The District has a mature, diverse economic base that has seen growth, particularly in property taxes, contributing to its favorable bond rating. Additionally, the rating signifies confidence in the District's ability to manage its outstanding Unlimited Tax School Building and Refunding Bonds, which are funded by a direct pledge of ad valorem taxes on all taxable properties within DISD. Despite these strengths, the rating was balanced by challenges, including a recent trend of declining enrollment, which could pose risks to future financial stability. In fiscal year 2023, the State's recapture of tax revenues represented a notable portion of the District's general fund expenditures, indicating potential strains on its financial resources. However, KBRA's Stable Outlook suggests the agency expects DISD to continue effective management of its finances while navigating obligations, repaying recaptures to the State, and addressing capital needs. The District is dealing with the implications of future debt issuance that will be vital for its operational and infrastructure requirements, reflecting a well-considered strategy. As for future concerns, a decline in the ad valorem tax base could negatively impact the rating. Still, the current assessment implies that the District's credit factors remain robust, allowing for a balanced approach in managing its growth and financial obligations. Overall, the AAA rating showcases DISD's ability to sustain its operations effectively, despite facing inevitable challenges related to enrollment and financial management. In summary, this rating action by KBRA not only underscores DISD's current financial health but also sets a solid foundation for its future, provided the District can maintain its growth trajectory and manage financial risks effectively.