Based on strong, effective and conservative money-management of taxpayer dollars, McAllen ISD has received an improved credit rating from a major credit-rating service.
Moody’s Investor Service has upgraded McAllen ISD from Aa3 to Aa2 in general obligation unlimited tax bonds. The upgrade also applies to the district’s outstanding maintenance tax notes (limited tax), which are on parity with the unlimited tax obligations.
“This is very, very good news and what it signifies is that the financial practices that the district is putting into place are being recognized by the bond community and by investors in bonds,” Dustin Traylor, a managing director with RBC Capital Markets, explained in a report to the McAllen School Board at a meeting on May 8. “It means the district is becoming even more credit-worthy. It is identical to a credit score.”
Moody’s report, released on April 26, cites the district’s credit strengths. These include:
- Ample tax base that benefits from cross border trade with Mexico
- Strong fiscal management resulting in operating surpluses and healthy financial reserves
- Low debt burden with above average principal amortization.
“You have done a tremendous job of managing (the district’s) fund balance and increasing that fund balance over the past several years and that’s part of what led to this upgrade by Moody’s,” Traylor said. “I don’t know any districts here locally that carry a higher bond rating. It’s kudos to this (School) Board and it’s kudos to the administration for a job well done.”
McAllen ISD’s bond rating has increased several times in the last 10 years, Traylor added.
The district’s unassigned fund balance is at a healthy $49.3 million. According to the report, “the district maintains stable reserves with conservative budgeting practices and strong fiscal management.”
“I do want to take this opportunity to thank previous administrations for setting a solid foundation and really setting the trail for us,” McAllen ISD Superintendent J.A. Gonzalez, Ed.D., said. “Also, I want to thank previous boards for being good stewards of public monies along with this outstanding board that has continued being very laser-focused on being responsible with the public’s monies. It’s the vision of this board that continues us on this track.”
Dr. Gonzalez also thanked Assistant Superintendent for Business Operations Lorena Garcia and Chief Financial Officer Cynthia Richards for their leadership and skill in managing the district’s finances.
Traylor echoed that sentiment.
“I am always amazed at their attention to detail as it relates to McAllen ISD,” he said. “I will just tell you that their professionalism, in which they handled this business, is unmatched.”
“I am absolutely thrilled at this news,” Trustee Johnathan Ball said. “The reason I’m so happy about it is for the four years I’ve been on this board, I’ve heard at various times, from various people, that this board is not fiscally sound, that we are not fiscally responsible. There usually seems to be something that comes out. Somebody will say during a campaign that we haven’t been good stewards of that money. And you come in here and talk about our credit rating, tells me, number one, that any of those statements, any of those assertions, they are completely false. Because we, through Ms. Garcia and her staff, who, as you’ve said, have such incredible attention to detail, are constantly recognized by the state as being fiscally sound, fiscally responsible (and) good stewards of taxpayer money. So, not only is the state of Texas saying we are fiscally sound, fiscally responsible, but now the private equity industry, the private financial industry is saying that as well. Previous boards, previous administrations, all the way up to this current board, we are financially responsible and financially sound and we do an excellent job with the taxpayer money for the city of McAllen and now we have proof, not only from the state of Texas, but from the private sector as well. Ms. Garcia, you are absolutely leading us in that and you’ve done a very fine job taking the reins over from previous leaders so thank you so much for that.”
The district’s total operating funds, which includes reserves in both the General Fund and the Debt Service Fund, increased to $89.1 million in the last fiscal year. This is a significant improvement to the district’s financial position in 2011 when the reserve was at $46 million.
“The stability of reserves and solid financial management are important considerations in the rating upgrade,” Moodys wrote.
The district’s business and purchasing departments have won multiple awards in recent years. In March, the district qualified for the Certificate of Achievement for Excellence in Financial Reporting – the highest form of recognition in governmental accounting and financial reporting.
Not only has the district earned this distinction for seven straight years but it has earned many other awards for its business and purchasing practices which exemplify the district’s effective management of the taxpayers’ dollars and transparency. This includes:
- Texas Comptroller of Public Accounts awarded the Transparency Star for Traditional Finances for 2016
- Texas Comptroller of Public Accounts awarded the Transparency Star for Debt Obligations for 2016
- Leadership Circle Platinum Seal Award for financial transparency from Texas Comptroller (Comptroller’s highest category 2014 and 2015)
- Leadership Circle Gold Seal Award for financial transparency from Texas Comptroller (Comptroller’s highest category in 2013)
- Texas Education Agency’s School FIRST (Financial Integrity Rating System of Texas) highest rating (13 times in 14 years)
- Distinguished Budget Presentation Award from the Government Finance Officers Association of the United States and Canada (GFOA) for its budget for 2015 and 2016