Half a billion dollars. It’s a lot of money.
On Nov. 7, area residents will decide how Leander ISD will grow and expand over the next several years. A $454.4 million bond package is on the ballot. If passed, the bond package would fund the design, construction, and furnishing for four new schools, land purchases for nine future schools and safety and facility improvements throughout the district.
These are all items the district says are must-haves in order to keep up with current and projected growth.
Additional items included in the bond package range from improving security in the vestibules at area middle and high schools to improving HVAC systems at Cedar Park and Leander Middle Schools.
All of this can be done, according to the district, without an increase in the tax rate. How? We asked the district’s spokesperson Corey Ryan to explain. And, he did.
Previously, Leander ISD – along with a host of other school districts in the state – ran into some controversy over the excessive use of a financing tool called Capital Appreciation Bonds. Fast-growing districts need money, often very quickly, to keep up with growth. Since 2007, LISD grew by 11,828 students. Leander ISD is currently adding about 1,000 students a year, with the current district population estimated to be near 39,000. Current projections suggest that LISD will need to have the facilities to educate an enrollment of more than 50,000 by 2025.
And that’s where the problem lies.
The state’s school financing system provides for the ongoing education costs (though most agree it’s not a good system and doesn’t provide adequate funding for many schools across Texas). What the state’s financing system does not do, however, is provide for the construction of new schools or pay for repairs and upkeep of existing properties.
So, school districts need the ability to raise funds quickly. Capital Appreciation Bonds allowed districts, like LISD, to raise the needed money without raising tax rates in the short term. Instead, they simply kicked the payments — including all accrued interest — down the road several years. Depending on how long they waited to pay, the total amount the taxpayers would ultimately end up paying could be a staggering sum.
There are horror stories of school districts going bankrupt because they didn’t have the money to pay once the amount, including all of that accrued interest, ballooned to several times the original bond amount and became due.
Ryan explained to us that Leander ISD has been steadily paying down the portion of its debt still in CABs. This new bond issue, he said, will continue that process, while issuing new bonds using a different bond financing tool, called Capital Investment Bonds. While still relying on the anticipated future growth of the district to help pay for the bonds, the district will make regular ongoing payments instead of kicking all the interest down the road.
That reduces the overall cost of the bonds, while providing the district the opportunity to raise the funds it needs to manage growth.
Another important point in this bond election: Voters are only being asked to authorize the issuance of $454.4 million in bonds. Ryan said the bonds won’t actually be issued right away. Instead, they’ll be issued in stages, and some may not be issued at all if the anticipated growth doesn’t actually come to fruition.
Every investment vehicle carries risk. There is certainly risk associated with CIBs, but it is far less than the risk associated with CABs, and the district has made strides to unload debt related to CABs. We hope that will continue.
For now, Leander ISD needs this bond. We don’t need more kids in portables and we don’t need to skimp when it comes to providing a safe environment for our schoolchildren.
We encourage a vote of FOR on the Leander ISD bond issue.