Moody's Investor Service Upgrades BISD Rating

The following is a press release from Moody's Investor Service detailing the District's financial rating.

New York, July 19, 2018 -- Moody's Investors Service has upgraded Beaumont Independent School District, TX's outstanding general obligation unlimited tax bonds to A1 from A3; outlook revised to stable from positive. 

RATINGS RATIONALE

The A1 rating reflects the district's financial recovery following a reserve-decimating fraud scandal in 2013 and 2014. The rating incorporates the district's strong management, oversight by the state and greatly improved financial profile which offsets the district's elevated debt burden. The rating also incorporates the district's large and growing tax base heavily reliant on the petrochemical industry and declining enrollment.

RATING OUTLOOK
The stable outlook reflects the district's transition back to an independent board and their ongoing commitment to maintain reserves at their current level, despite near term headwinds presented by diminished enrollment.

FACTORS THAT COULD LEAD TO AN UPGRADE

- Ability to maintain positive financial trend after transition to local school board from state oversight

- Additional years of surplus operations leading to increased reserves

- Stabilized and improved enrollment trends

FACTORS THAT COULD LEAD TO A DOWNGRADE

- Trend of declining reserves or liquidity

- Increase in the debt or pension burden

- Tax base decline

LEGAL SECURITY
The bonds are secured by an annual ad valorem tax, levied against all taxable property in the district without legal limitation as to rate or amount.

PROFILE
Beaumont Independent School District operates as an independent school district under the laws of the State of Texas. It is located in Jefferson County (Aa2) about 85 miles east of Houston (Aa3 stable) and 30 miles west of Louisiana (Aa3 stable). The district provides K-12 education services to roughly 18,900 students.

METHODOLOGY
The principal methodology used in these ratings was US Local Government General Obligation Debt published in December 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.