Fitch Upgrades Canyon ISD, Texas' ULT Bonds to 'AA-'; Outlook Stable

AUSTIN, Texas--(Business Wire)--
In the course of routine surveillance, Fitch Ratings has upgraded Canyon
Independent School District, Texas' (the district) $90.5 million outstanding
unlimited tax bonds to 'AA-' from 'A+'. The Rating Outlook is Stable.

Fitch's upgrade on the district's underlying rating reflects a strengthened and
solid financial position, achieved despite increased enrollment growth
pressures. Further diversification of the growing tax base adds to previously
cited strengths, such as sound management practices and modest debt levels. The
district has no immediate debt plans and capital needs appear manageable over
the near term. These positives are balanced against below average amortization
(although not atypical of growing school districts in Texas) and a stable yet
somewhat limited area economy. Maintaining solid reserves remains a key rating
driver, given likely budget pressures from continued enrollment growth.

The district is located approximately 15 miles south of downtown Amarillo,
serving a 720-square mile area that is largely rural and encompasses roughly
50,000 individuals. The city of Amarillo is a regional hub that serves as the
banking, distribution, and commercial center for the Texas Panhandle. Benefiting
from its proximity, the district's economic base is shifting away from a rural,
agricultural area to that of a bedroom community. While rising to 5.8% in
September 2009, Amarillo area unemployment levels remain low and well below
those of the state and nation, comparable to historical patterns. Wealth levels
are typically above local and state averages.

Growth trends in the district's enrollment and tax base have resulted from the
area's available land which spurred predominately residential development
pushing south from the city of Amarillo and subsequent population growth. While
moderating slightly in fiscal 2010, tax base growth remained stable and healthy
at almost 7% from the prior year, reaching approximately $3 billion. Attendant
commercial/retail development has further expanded the tax base; taxpayer
concentration is minimal. District enrollment that now totals almost 8,800
students has grown at an average annual pace of just over 2% since fiscal 2005
and the district has experienced even higher levels of enrollment growth in
fiscal years 2009 and 2010, despite the recently slowed housing market.

Finances are a positive credit factor. Since fiscal 2004, the district has
consistently recorded operating surpluses and solid reserve levels enhance the
district's financial flexibility. At the close of fiscal 2008, the unreserved
general fund balance totaled almost $21 million, which represented a very high
41% of spending and remained well above the district's informal operating
reserve policy of maintaining no less than three months or 25% of expenditures.
The district now anticipates closing fiscal 2009 with a $2 million addition to
reserves. The district currently projects about a $3.3 million operating deficit
in the fiscal 2010 budget, primarily due to planned, one-time capital
expenditures. The district has no immediate plans to approach voters for
additional operating tax rate increases.

Debt levels remain modest, assisted in part by state support for the district's
debt that has declined from prior years' levels with increased property wealth.
Overall debt levels approximate 3.6% of taxable assessed value or $2,200 per
capita. Comparable to earlier projections, no near-term debt plans are
anticipated as district management reports capital needs have been met for at
least four or more years. Future facility needs are expected to be at the
intermediate/junior high level. Amortization is below-average. While only 35% of
principal is retired in 10 years, the debt service expense remains fairly level
before declining in 2014.

Additional information is available at 'www.fitchratings.com'

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE.

Fitch Ratings
Rebecca Moses, +1-512-215-3739 (Austin)
Gabriela Gutierrez, +1-512-215-3731 (Austin)
Media Relations:
Cindy Stoller, +1-212-908-0526 (New York)
cindy.stoller@fitchratings.com

Copyright Business Wire 2009