DALLAS — La Marque Independent School District's $23 million of outstanding debt is on Standard & Poor's watch list for a downgrade after Texas Education Commissioner Michael Williams ordered the district closed.
The district's debt is rated A-minus but carries a triple-A guarantee from the Texas Permanent School Fund.
If the Galveston County school district fails to win its appeal, its 2,500 students would likely be absorbed by surrounding districts. The district 40 miles south of Houston has seen declining enrollment and weakening financial performance in recent years.
The agency also sent notice this week to two smaller districts that it intends to close. Jonesboro ISD, with 189 students in Coryell County, and Brookesmith ISD, with 177 students in Brown County, were ordered closed.
The state most recently ordered the closure of Harris County's North Forest Independent School District, and Houston ISD annexed it.
"We could lower our underlying rating, potentially by more than one notch if, after the receipt of additional information about the district's finances and potential course of action about its accreditation, we determine that the potential loss of accreditation will materially weaken the district's credit profile," Standard & Poor's analyst Ann Richardson wrote.
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 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.
