A major credit agency has downgraded Dallas ISD’s bond rating weeks before voters weigh a multibillion-dollar proposal.
Fitch Ratings on March 18 lowered Dallas Independent School District’s Issuer Default Rating and general obligation bond rating to “AA” from “AA+,” citing concerns about the district’s long-term liabilities and the likelihood of additional debt issuance.
The downgrade comes as Dallas ISD prepares for a May vote on a proposed $6.2 billion bond package, one of the largest in the district’s history, aimed at funding new schools, renovations, and infrastructure upgrades.
Fitch’s commentary stated the rating cut reflects a “midrange” assessment of the district’s long-term liability burden. It warned that future borrowing to meet capital needs could further strain those metrics. While the agency maintained a “Stable” outlook and noted strong financial reserves—projected to remain at or above 20% of spending—it indicated that liabilities have deteriorated relative to income and revenue.
The agency’s notice also pointed to weaker demographic trends, including slow population growth and economic metrics that fall below portfolio medians. However, it noted the district benefits from a large and diversified economy in the Dallas-Fort Worth area.
The timing of the downgrade follows reporting by The Dallas Express highlighting debate over whether the proposed bond addresses the district’s most pressing challenges, particularly student performance.
As previously reported, only 18% of Dallas ISD eighth graders were proficient in reading in 2024, according to federal assessment data reported by WFAA.
That report also included criticism from education activist Russell Fish, who questioned the connection between large capital spending and academic outcomes.
“No,” Fish said when asked whether the $6.2 billion bond is necessary to improve reading proficiency. “Well, I have yet to see a bond issue that affects literacy or mathematical skills… those have nothing to do with buildings.”
Fitch’s analysis did not directly address academic performance but emphasized financial and economic indicators, including revenue volatility, unemployment levels, and median household income. The agency noted that Dallas ISD’s unemployment rate stands above the national average and that median household income trails the broader rating portfolio.
At the same time, Fitch highlighted strengths, including strong expenditure control and high financial resilience, supported by a fund balance projected at 47.4% of current-year spending.
The district’s bonds remain backed by an unlimited property tax and the Texas Permanent School Fund guarantee program, which carries a “AAA” rating from Fitch.
The Dallas Express reached out to Dallas ISD for comment on the downgrade and its potential impact on the upcoming bond vote, but did not receive a response before publication.
The bond proposal is set to appear on the May ballot in multiple propositions, allowing voters to weigh different components of the plan individually.
