Dallas County Schools may be on the brink of defaulting on millions of dollars of debt payments due June 1.
The credit rating agency Moody's has downgraded DCS' credit rating, again, now to very low junk bond status. The rating is so low they are rated to debts held by Puerto Rico -- a bankrupt government.
A default could complicate the agency's already shaky financial situation and make it increasingly hard for DCS to borrow money in the future -- threatening its ability to operate.
DCS interim superintendent Leatha Mullins released a statement Thursday saying:
"Obviously this is a serious situation and there are more questions than answers. We are working hard to pay our obligations and do everything we can to protect the assets for taxpayers and employees while continuing services for school districts. There are lots of moving parts to this and we will know more by the end of the week."
It appears DCS has so far been unable to come up with the cash it needs to make more than $10 million in debt service payments due June 1.
DCS has more than $130 million in outstanding debt and has lost millions of dollars on a school bus camera venture the agency launched using public money.
Friday, the Texas Attorney General's Office rejected a restructuring plan that could have averted the current cash flow crunch.
The attorney general's office said it had concerns about DCS' debt load and its ability to meet financial obligations. The denial also cited uncertainty surrounding a bill that recently passed the Texas legislature that would shut down the agency unless a majority of voters elected to keep it running.
Mullins, Thursday, accused lawmakers of contributing to the current financial crunch.
"These events should make it clear to lawmakers that this bill was hastily prepared and pushed through without consideration for the children. After all, summer school starts next week," Mullins said in a statement.
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