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Financial adviser: Brenham ISD tax base $4.3B; downgrade to A1 tied to falling fund balance
Summary
Financial adviser Steve Perry told trustees Brenham ISD’s taxable value is about $4.3 billion (after the $140,000 homestead exemption), the district’s underlying credit rating was lowered to A1 because of eroded general-fund balance (~$3.7M), and that the district has capacity to issue roughly $39M in bonds without raising the I&S tax rate.
Financial adviser Steve Perry presented an overview of district finances and debt capacity, telling trustees the district’s taxable property value as of Jan. 1, 2025, is roughly $4.3 billion after accounting for the proposed $140,000 homestead exemption. Perry said the district’s underlying credit rating was downgraded to A1 in 2024 primarily because the general-fund balance declined from a prior high (around $15 million) to about $3.7 million at fiscal year end.
Perry described how the state’s Permanent School Fund guarantee gives bonds a triple-A sale rating while investors look at a district’s underlying rating to assess relative borrowing costs. He projected that under conservative assumptions (moderate future growth and market rates) the district could issue approximately $39 million in bonds without increasing the I&S tax rate and recommended cautious modeling to avoid inadvertently raising debt levies in future years.
Board members asked whether expected Federal Reserve interest-rate cuts would reduce borrowing costs; Perry said lower rates would help but he builds conservatism into his models and prefers to assume 5% property growth in forecasts. Perry’s presentation formed the financial basis for the board’s subsequent votes to set tax rates and call a bond election.
