The Texas Attorney General's Office has informed Dallas County Schools it will not be allowed to restructure its bond debt.
Without that restructuring deal the troubled school bus agency could default on its debt payments by June 1 – less than a week away.
In a statement released Friday evening to NBC 5 Investigates, the office of Attorney General Ken Paxton said:
"Our office conducted a thorough legal review to determine if Dallas County Schools has stable revenues to cover operating expenses while using its maintenance tax to issue additional tax debt. We concluded there is reasonable doubt as to the legality of the proposed tax obligations. Aside from its financial instability, Dallas County Schools could be abolished under a bill passed by the Legislature. Given this instability, we cannot approve Dallas County Schools' proposed debt restructure."
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For months, NBC 5 Investigates has been reporting on the serious financial trouble at DCS. The DCS board just approved the restructuring deal last week that would have given the agency cash to continue operating.
But government bond deals must be approved by the Attorney General's Office in Texas.
DCS owes more than $10 million in debt payments next week. Without the money from the restructuring deal the agency may default on those payments. That puts the entire future of DCS in doubt.
DCS can appeal this ruling from the AG's office.
A bill currently before lawmakers in Austin would put the future of DCS in the hands of Dallas County voters in November
The author of the bill – State Sen. Don Huffines, R-Dallas – said Friday he's confident it will make its way to the governor's desk for his signature.
"This is an important decision that the Attorney General has issued, this letter, this ruling, and it's important for Dallas County, and it's important for taxpayer,s and it's imperative that we shine more light on this rogue bureaucracy," Huffines said.
DCS Interim Superintendent Leatha Mullins released a statement Friday evening, saying:
"We are baffled by the decision, because it (the restructuring deal) met every requirement from the Legislature and the bond holders. Tonight, we have been contacting the decision makers to challenge this. We continue to fight to serve the children we take to and from school every day. I'm not sure Dallas County cities and school districts understand the results of a decision to dissolve DCS."
NBC 5 produced a special in-depth investigative report revealing the latest developments in the ongoing investigation into Dallas County Schools, the taxpayer-funded agency responsible for the daily transportation of 75,000 North Texas students. NBC 5 anchors Brian Curtis and Meredith Land and Senior Investigative Reporter Scott Friedman explain the latest findings in the NBC 5 Investigates' special report, "Big Buses, Bigger Problems: The $25 Million DCS Land Deal," on Saturday at 6:30 p.m. on NBC 5.