DALLAS - The Texas Education Agency's plans to close the La Marque Independent School District are on hold, prompting an update on the district's A-minus underlying credit rating from Standard & Poor's.
The ratings agency placed the district on its watch list with negative implications when the TEA announced plan to close the district because of its failing academic ranking in February. On April 8, the TEA delayed the district's July 1 closing. The new S&P view is "developing."
"We will likely resolve this CreditWatch in the next 90 days, and will continue to monitor and review information provided by the district and the TEA," S&P analyst Ann Richardson said. The agency could raise or lower the rating depending on the outcome of the TEA's financial and academic assessment.
"Based on preliminary results, we believe the district will achieve at least a standard, or a passing grade, for its financial integrity rating given the financial strides made in fiscal 2014," Richardson wrote. "There remains some uncertainty regarding the academic rating; the district earned the state's lowest academic rating in three of the past four years."
If district does not obtain passing marks in both its financial and academic evaluations, it will lose its accreditation and the TEA will order the district's closure.
District officials treated the reprieve as a victory.
"Thanks to the tremendous effort from our teachers, administrators, paraprofessionals, parents, students, volunteers, board members, and community, the Texas Education Agency is giving La Marque ISD additional time to remain open and operational," Superintendent Terri Watkins said in a prepared statement. "The main condition from this vote of confidence from TEA is to meet standard on the 2014-2015 accountability and financial rating systems. If the district accomplishes this task during the coming months, TEA will allow the district to have a new beginning."
Owners of the district's $23 million of outstanding bonds will not be at risk if the district is closed. The bonds are guaranteed by the Texas Permanent School Fund, which provides a triple-A rating. The TEA administers the PSF for school districts in Texas.
LaMarque ISD, in Galveston County 40 miles south of Houston, has about 2,500 students. The district's property tax base is heavily concentrated in the petrochemical industry. A Union Carbide chemical plant, the leading taxpayer, accounts for a large 20% of assessed value.
Moody's Investors Service downgraded the district's underlying rating in 2011 to A2 from A1, citing, in part, the impact from Hurricane Ike that hit the coast in 2008. The district's historically stable tax base fell 14% in fiscal 2011 due to reappraisals following the storm.
