Recognized again: credit rating downgrade

Recognized again: credit rating downgrade

Another credit rating service, Standard & Poor's, has recognized the Beaumont Independent School District’s “deficient internal control mechanisms” and downgraded BISD’s standing to 'A-' from 'AA-' according to information supplied to investors April 9. This is not the first credit rating downgrade BISD has received this year, with Moody’s lowering the school district’s credit rating stance in February 2014 stating that the motivation for taking action resulted from BISD’s “severe governance challenges” and “multiple pending investigations.”

Standard & Poor's Ratings Services lowered its issuer credit rating on BISD, assigning a negative outlook to the school district due to “deficient internal control mechanisms that have been evidenced in conjunction with the indictment of two former district officials on embezzlement charges,” according to Standard & Poor's credit analyst Lauren Spalten. BISD still retains an enhanced program rating on its outstanding bond debt, however, due to the district's eligibility for, and participation in, the Texas Permanent School Fund bond guarantee program that provides the security of a permanent fund of assets.

"The downgrade of the district's unenhanced ratings primarily reflects our view of the district's weakened financial position and financial management practices, including reported gaps in internal controls uncovered by an ongoing FBI embezzlement investigation and an investigation by the Texas Education Agency," Spalten said.

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