Fri February 8, 2013
Moody's: TX School Finance Ruling 'Credit Negative'
The Moody’s credit rating agency says last week’s Texas school finance ruling could have a negative effect on the state’s credit rating. Last week, a state district court ruled that the present school finance system is unconstitutional, in part because it inadequately funds public schools.
Moody’s is not downgrading Texas’ coveted triple-A credit rating, but the report suggests that could all change if the state is forced to tap its reserves to overhaul the school finance system.
Bill Peacock with the conservative Texas Public Policy Foundation says that Texas’ credit rating shouldn’t be at risk.
"Moody’s just assumes that, one: we need to spend more money on the school finance system without really knowing anything about how the Texas schools operate," Peacock said. "And two: they seem to assume that we’re going to take it from the Rainy Day Fund or something like that"
The school finance ruling is almost certain to be appealed, and state lawmakers are unlikely to overhaul the system before a final decision from the Texas Supreme Court.