Despite its takeover by the state last year, California’s Inglewood Unified School District was able to retain an investment grade rating of BBB-minus from Standard & Poor’s and had its outlook revised to stable from negative ahead of plans to price $30 million in series 2013 general obligation bonds on Wednesday.
The district is also undergoing an Internal Revenue Service audit. District officials say, however, that the school district was randomly selected for a routine audit.
“It was not the result of a specific complaint, but the district is complying and providing all the documents the IRS is requesting,” said Jazmin Ortega, spokeswoman for California Department of Education.
Standard & Poor’s analyst Lisa Schroeer said the BBB-minus rating “reflects all of the uncertainty surrounding the district’s financial situation, but it does not speak directly to any sort of legal investigation.”
Schroeer added that the rating reflects all of the moving parts.
“We discussed a lot of uncertainties including negotiations with the unions and other things being dealt with by the district,” she said.
S&P analysts partly attributed the retention of the investment grade rating to the fact that La Tanya Kirk-Carter, the interim administrator, signed a four-year contract. Kirk-Carter was originally hired to be the district’s assistant superintendent of business services.
The rating agencies outlooks are generally looking out two years, said Chris Morgan, an S&P analyst.
Kirk-Carter’s four-year contract means that even if a different person is hired to be the administrator, and she returns to her original position, the school district will retain continuity in management while it works through it issues.
“We believe having the state oversight and a management leader with a longer-term commitment provide some stability and support the likelihood that financial and institutional changes will be implemented successfully,” Kirk-Carter said. “The school district has been under state receivership since October.”
Two months after Kent Taylor was appointed by the state in October 2012 to be the district’s administrator, he resigned after the California Department of Education learned that he had struck tentative agreements with the teachers union without proper authority.
Taylor was appointed administrator after the school district asked the state for an emergency $55 million loan, triggering a state takeover.
The loan the state made to the district helped it close a $17.8 million budget deficit, which S&P also deemed as favorable in its report.
S&P downgraded the district to BBB-minus from BBB-plus in September 2012 and gave the district a negative outlook at the time.
At that time, S&P said it acted because of concerns the district might fail to take the loan offered by the state and fail to close the budget gap.
Kirk-Carter, who worked as a business and facilities consultant at Beverly Hills Unified School District for four years prior to accepting the position with the school district, earned a reputation as a reformer after she uncovered budgetary problems in that district.
Inglewood is located between South Central Los Angeles and Los Angeles International Airport.
The school district enrolls about 14,000 students, according to the California Department of Education.
Inglewood USD is the ninth school district in California since 1990 to be taken over by the state after requiring an emergency loan.
The district obtained approval from voters for a $90 million bond program in November 2012. School district GOs in California are repaid using a separate property tax levy approved by voters when they authorize the bonds.
