Where is Moody? In New York? Who sent this to them?
The downgrade to A1 reflects severe governance problems plaguing Beaumont Independent School District (BISD), including lack of internal controls, a divided board, as well as allegations of fraud and multiple pending investigations. The A1 rating also takes into consideration recent declines in reserves, the district's sizeable tax base concentrated in the petrochemical industry, below average wealth levels, and an elevated debt burden with no additional debt plans in the near term.
The negative outlook reflects Moody's expectation that the district will face additional challenges in the near- to mid-term given the ongoing special accreditation investigation by the Texas Education Agency, as well as separate federal investigations. Additionally, the outlook reflects uncertainty surrounding the extent of future state involvement in the district's operations, as well as projected narrowing liquidity resulting from budgeted draws on General Fund reserves in fiscal 2013 and 2014.