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[x Business Wire]
Fitch Assigns Amarillo Jr College Dist, TX GOs Initial 'AA' Rtg

AUSTIN, Texas--(BUSINESS WIRE)--Nov. 25, 2003--Fitch Ratings assigns an initial 'AA' rating to $6.7 million of Amarillo Junior College District (AJC or the district), Texas' general obligation refunding bonds, series 2003, which are expected to price Dec. 1 via a syndicate led by Banc of America Securities LLC. Additionally, Fitch has assigned a 'AA' rating on the district's $12.6 million in outstanding general obligation bonds. The Rating Outlook is Stable.

Dated Dec. 15, 2003, the bonds mature serially beginning Feb. 15, 2004-2014 and are subject to optional redemption as prescribed in the offering statement. The bonds are direct and voted obligations of the district, payable from an ad valorem tax levy within the limits prescribed by law on all taxable property within the district. The maximum property tax rate for debt service is $0.50 per $100 taxable assessed valuation. Proceeds will be used to refund outstanding series 1994 bonds for interest savings.

Fitch's initial rating of 'AA' on the district's general obligation bonds reflects steady growth in its enrollment and tax base, low debt load, and satisfactory financial performance. While the combination of enrollment gains and reduced state appropriations present some financial challenge, comfort is provided by the availability of AJC's ample operating tax margin, low tuition rates, and competitive position in a large and modestly growing service area. The lack of a formal capital plan poses some risk. However, the district has historically taken a conservative approach to debt financing.

The district's taxing jurisdiction is coterminous with the City of Amarillo, which covers both Potter and Randall counties. The city's 2000 census grew by more than 10% since the last census and now totals over 179,000. Amarillo serves as the banking, distribution, and commercial center for the Texas panhandle. The district's entire service area, which includes 26 counties, is estimated to total about 400,000. Steady commercial and residential development, averaging over $200 million per year since fiscal 1999, has enabled the city to maintain steady and notably low unemployment rates. Health care and food production and distribution are the largest area employers.

Comprised of four campuses, the district's major capital programs were completed in the mid-1990's. The lack of additional debt financing since then has resulted in a very favorable debt profile and principal payout. Future debt plans are uncertain at this time given the recent appointment of the district's president. Deferred maintenance needs are reportedly modest and addressed through the ongoing use of current reserves.

Enrollment trends have been positive, with student headcount growing to more than 11,700 in fall 2003, a greater than 40% increase since fall 1998. A new branch campus has been proposed in Hereford by community residents; pending approval of a local maintenance tax, the district has agreed to begin operations in fall 2005.

Typically, public colleges and universities record break-even operating results. From fiscal 1998 to fiscal 2001, AJC has recorded essentially break-even or better operating margins. While a direct comparison with prior years' performance is difficult due to a change in reporting format, fiscal 2002 and preliminary fiscal 2003 results point to a continuation of prior year trends. Diversity of revenue sources lends to stability, with the district dependent on a combination of state appropriations, property taxes, and tuition and fees for operations.

As in the case of all state agencies, state appropriations have been reduced, beginning in fiscal 2003. However, reductions have been offset by expenditure cuts, tuition rate and property tax increases, as well as enrollment and tax base growth. No programs have been eliminated. In addition, liquidity remains favorable, with available funds to expenses covering over five months of operations.

Contacts

Fitch Ratings
Jose Acosta 512-322-5324, Austin
Mark Campa, 512-322-5316, Austin
Matt Burkhard, 212-908-0540, New York (Media Relations)

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