Fitch cuts Dallas school district rating ahead of big bond election

Dallas Independent School District, which is seeking voter approval for $6.24 billion of general obligation bonds in May, received an underlying rating downgrade to AA from AA-plus from Fitch Ratings.

The rating cut and stable outlook announced on Wednesday reflects "the district's elevated long-term liability burden, which has grown substantially with recent bond issuances needed to address very large district-wide deferred maintenance needs," according to Fitch analyst Omid Rahmani.

"Such growth has outpaced gains in the district's resource base comprised of personal income and governmental resources," he said in a statement. "The long-term liability metric could be further exacerbated if voters approve all or some portion of the May 2026 bond election."

The four-part bond proposition on the May 2 ballot would earmark $5.92 billion for capital improvements, $144.7 million for technology upgrades, $143.34 million to refinance outstanding debt, and $26.25 million for pool renovations, and would require an increase in the district's interest and sinking property tax rate.

In response to the downgrade, Eduardo Ramos, the district's deputy superintendent of business services, said: "Despite Dallas ISD not having any control over our personal wealth per capita, which affects our rating, we are proud of our strong reserves, general operating budget management, and our ability to have managed our debt resulting in the lowest total tax rate in the (Dallas-Fort Worth) area."

Texas' second-largest public school system issued nearly $739.6 million of unlimited tax school building bonds and $227 million of variable-rate bonds earlier this year. The debt offerings, which were sold with the Texas Permanent School Fund's triple-A-rated guarantee, carried underlying ratings of Aa1 from Moody's Ratings and AAA from KBRA with stable outlooks.

Dallas ISD, which had $4.49 billion of GO bonds outstanding at the end of fiscal 2025, serves 134,500 students at its 133 elementary, 56 middle, and 39 high schools.