QUESTIONS ADDED on March 19, 2018.
1. HOW WAS THE GALVESTON ISD 2018 BOND DEVELOPED?
The 2018 Galveston ISD School Bond is a result of quality community input and careful weighing of options. The bond package was pulled together by a Facilities Citizens Advisory Committee made up of 49 community leaders, parents, and teachers representing a cross section of the district. The Committee received information from district administration and industry professionals and provided input regarding Galveston ISD’s need for capital projects. The committee presented their final recommendation to the Galveston ISD Board of Trustees on February 7, 2018. That same night, the Board approved the committee’s recommendation and called for a school bond election.
2. WHAT IS INCLUDED IN THE 2018 BOND, AND HOW MUCH IS IT FOR?
If approved by voters, the proposed 2018 Bond will provide funds for renovations at Galveston ISD elementary schools, middle schools, and Ball High School; improvements to district support facilities; upgrades to football, baseball, and softball facilities; 20 new schools buses and 15 fleet vehicle; and safety+security and technology upgrades for every Galveston ISD campus. The Galveston ISD Board of Trustees called for a $31 million bond referendum to fund these proposed projects.
3. HOW DOES GALVESTON ISD’S CURRENT TAX RATE COMPARE TO OTHER GALVESTON COUNTY SCHOOL DISTRICTS?
4. IS GALVESTON ISD REQUIRED TO SELL 25-YEAR BONDS FOR ITEMS LIKE TECHNOLOGY OR BUSES?
No. Bonds are available in various lengths of time. Galveston ISD would like to keep the amortization of the technology equipment to bonds 5-years maximum and bonds of 10-12 years for buses.
5. IS GALVESTON ISD REQUIRED TO SELL THE ENTIRE BOND AMOUNT APPROVED BY VOTERS?
No. Galveston ISD will sell what is necessary to complete the proposed projects.
6. WOULDN’T THIS MONEY BE BETTER SPENT ON OUR STUDENTS’ EDUCATION?
Bond money does NOT pay for the general maintenance and operations of a school – it does NOT pay teachers, run buses, provide food services or maintenance and custodial services. If the bond does not pass, any renovations, remodels, and/or improvements to keep our schools open will come from maintenance and operation funds, which WILL take funds from the education of our children.
7. WHAT IS OUR CURRENT DEBT PAYMENT? WHAT WILL THE PAYMENT BE IF BOND2018 IS APPROVED BY VOTERS?
Our current debt balance is $59,638,263.
The 2017 payment was $6,235,738.
The 2018 net debt service payment will be $5, 878,925.
If Bond2018 is approved by voters we will add $31,000,000.
Our payments covering both the 2003 and 2018 bonds will begin in 2019. 2003 debt payment will be $4,693,088; new 2018 debt payment will be $2,975,000 and we will utilize I&S fund balance of $845,000 for a total 2019 payment of $6,464,088
QUESTIONS ADDED on April 4, 2018.
8. What is a bond election?
A bond election is similar to a popular election in that voters have an opportunity to express their view on a particular issue. Unlike a regular election, in which a voter expresses his or her support for a candidate, a bond election requires a person to vote in favor or against the district selling school bonds. If the bond election is approved by voters, the district sells the bonds and uses the bond proceeds to pay for special projects or expenses. The law restricts how a district can spend bond revenues. Bond revenues can only be used for capital equipment or improvements such as new construction, renovation projects, furniture, library books, computers and network technology, school buses or other vehicles, and similar items. Bond proceeds cannot be used for recurring costs such as teacher salaries and benefits, utilities, or insurance.
9. When was the last bond election, and how much was it?
The last Galveston ISD bond election was held in 2010. It was for $34.9 million and it failed to meet voter approval. The last successful GISD bond election was 2003 for $69.45 million.
10. Does the district have to share bond tax revenues with other districts and the state through the Robin Hood finance plan?
Absolutely not. There are two parts to our district tax rate: the part that pays for the everyday operation of the school district (the maintenance and operations rate) and the part that pays back district bonds (the interest and sinking rate). While the Robin Hood plan requires districts like Galveston ISD to share M&O taxes, 100 percent of every dollar of bond revenue stays in GISD.
11. What will happen if the bond election does not pass?
Students will continue to receive the best education the district can provide. However, the district will not be able to pay for most of the projects planned as part of the bond. Large renovations to existing facilities, purchases for items such as classroom technology, upgrades to safety and security systems and other bond election projects would be canceled.
12. HOW ARE MY SCHOOLS FUNDED?
There are essentially two tax rates that are paid by Galveston ISD property owners that comprise the local share of district funds.
The Maintenance and Operations (M&O) Tax Rate pays for day-to-day operational expenses such as salaries, employee benefits, supplies, transportation, fuel, insurance, maintenance, and utilities. No bond money will be used to cover these operating funds.
The Interest and Sinking (I&S) Tax Rate is based on the outstanding debt of the district. Debt is incurred when a district borrows money in the form of bonds in the same way a homeowner borrows money to finance the purchase of a home. It pays for design, construction, expansion and renovation of schools. These capital project funds can also be used for large or long-term expenditures such as the purchase of school buses or technology.
M&O and I&S are separated intentionally to meet different needs as described above. By law, the two must be kept in separate accounts and they are audited every year to ensure compliance.
13. What are our current school taxes in GISD?
The tax rate of $1.155 per $100 of valuation includes $1.06 for maintenance and operations and $0.095 for debt service.
14. What is our current debt for bonds? How does this not increase our tax rate? Does it reallocate $ from elsewhere? Does it release some sort of restricted fund? Where does the $ come from? Please explain how GISD can borrow more funds without any increase to the tax rate.
As of February 7, 2018, the district owed outstanding principal and interest balance of $59.64 million. The 2018 Payment on this existing debt is $6,237,925.
Beginning in 2019 the payment on this existing debt will be reduced to $4,693,088. If the 2018 Bond project for GISD passes voter approval, the additional payment on the new debt will be $2,975,000 for a sub-total of $7,668,088. Because of refunding the debt to lower interest payments over time, GISD can also contribute $845,000 to the 2019 payment for a total after Freeze Adjusted Tax Revenue of $6,464,088. The process of refunding and the I$S fund balance allows GISD to offer BOND2018 with no tax rate increase.
15. Where can I get detailed information on the recommendations?
Meeting agendas and minutes from the Citizen Advisory Committee meetings, handouts, research documents and the entire Bond Plan as approved by the Board of Trustees are available at www.gisd.org.
16. If the bond is approved by voters will our property taxes increase?
Property taxes are determined by applying property value (determined by the Central Appraisal District CAD) to the rates from Galveston ISD, City of Galveston, Galveston Community College District, and a range of Galveston County tax rates (MUD, Flood and Drainage, Emergency Services).
Galveston ISD has control over the TAX RATE which is currently $1.155 per $100 valuation. Barring a catastrophic event that would significantly lower property values, the Galveston ISD BOND2018 will allow the sale of $31mil for no GISD TAX RATE increase.
Galveston ISD does not have control over the CAD and other taxing entities and therefore we cannot say that your taxes will not increase.
17. In what years does the current GISD debt mature and in what quantities? Will these dates/figures change if proposed bond is approved by voters? Are these dates/figures the same as they were when the existing bonds were approved by voters? Please provide approximate annual debt, and sinking fund, payments until all current bonds are paid off.
Galveston ISD carries debt from the 2003 Bond Election. The debt from that election matures in 2029. The new debt, should BOND2018 be approved by the voters, will mature in 2030, based on the latest estimates. The debt from the 2003 election was issued and then refunded for interest savings but the final maturing date did not change. There was no extension of the debt due to the refunding.
The following chart is based on current estimates and analysis shred with the Citizen’s Advisory Committee and the GISD Board of Trustees prior to calling the GISD BOND2018 election
QUESTION ADDED on April 5, 2018.
18. What are GISD plans to annually service 20%+ more debt ($6.2 million to $7.7 million) beginning in 2019 without any increase to the tax rate. Refinancing the 2003 debt does not save the difference in the payments. Are the sinking funds being adequately financed for debt repayment(s) in 2029/2030? Where are you going to find the extra funds to service the additional debt?
The Refunding of the 2003 Bond changes the debt payment beginning 2019. Additionally, the District ended fiscal 2017 with $4.3MM in I&S fund balance. The projection for I&S fund balance after 2017-18 is $5.1MM. We have estimates to use about $3.8MM total over the next 6-years to maintain the I&S tax rate at $0.095, leaving a balance of $1.3MM at that time.
The continued tax rate + growth, the interest savings from the refunding and accumulated I&S fund balance support maintaining the $0.095 I&S rate to meet the payments to satisfy existing and new debt.
Our I&S fund balance numbers are very conservative because we have NOT included some prior year taxes, penalties and interest associated with the debt service fund. It is our intention to maintain the I&S fund balance greater than $1.3MM.
QUESTION ADDED on April 30, 2018.
19) Bond payment vs a hurricane? What kind of safe of guards are there in regards to payment of school bonds? Insurance and or Federal programs?
The GISD bonds will be guaranteed by the Permanent School Fund (PSF) Bond Guarantee Program which provides a guarantee of annual principal and interest payments to bondholders in case of financial hardship or catastrophic events. This guarantee also allows the District to market its bonds with a triple-A rating, the highest rating available from all three major rating agencies (Moody’s, Standard & Poor’s and Fitch). The triple-A rating helps to reduce the interest rates on Texas school district bonds.
20) what is the average bond debt for schools? Traditionally how long does it take schools to pay off bond debt (ie: most mortgages are 30 yrs)? Do most schools always carry bond debt, or do they typically pay off one bond and then have another bond election?
Average Debt for all 1024 school districts $115,009,313.00 the range is $57,283 to $4,470,000,000
160 ISDs have no Voter Approved Debt
This link will take you to the Texas Comptroller page for greater detail:
Schools typically finance debt over a period of time that allows them to keep the rates low (10-30yrs). Many school districts manage “rolling” debt that does not get fully amortized. Each school district has the ability and autonomy to engage the community to set their own debt plan within the limits set by the Texas Legislature.