Posted: 12:00 a.m. Thursday, Dec. 25, 2014
By Kiah Collier – American-Statesman Staff
When Hays Consolidated Independent School District trustees voted to put a bond package on the ballot earlier this year, a new high school was not included — even though the two existing campuses are above capacity and the district is expecting to add upwards of 1,000 students a year for the foreseeable future.
That’s in part because financing a new high school would have pushed the district past a state limit on local school bond debt, set in 1991. Dozens of booming suburban school districts across the state – including many in the Austin area – have bumped up against that limit in recent years as they try to accommodate an influx of new students.
The debt ceiling
As state funding for new schools has dwindled and the population has exploded, the number of districts that have hit the 50-cent-per-$100-valuation debt service limit — or exceeded it — has grown from zero in 2003 to nearly three dozen last year, according to data provided by the Texas Education Agency. In 2008, five districts were at the cap.
The problem is particularly pronounced in areas that do not have significant commercial property value to boost their tax bases. Some districts, like Leander, have skirted the limit by employing controversial capital appreciation bonds that defer payments for years; Others have sought longer-term bonds, which keep them from hitting the limit but result in millions more dollars in interest payments.
Leander, Hays Consolidated and many other Austin-area suburban districts are members of the Fast Growth School Coalition, which is leading an effort to persuade lawmakers to give some school districts latitude to exceed the debt limit. The group advocates for 85 districts it has identified as fast growth – the vast majority clustered in suburban areas near the state’s biggest cities – that are taking on about 80 percent of the new student enrollment in the state even though they make up a small fraction of the total number of districts. There are about 1,200 in the state, including charter schools.
Fast-growing school districts
The coalition worked with state Rep. Eddie Rodriguez, D-Austin, on a bill he filed last week targeting 57 fast-growth districts that are within 5 cents of the debt limit. House Bill 506 would allow them to exceed the cap by 20 percent — as long as they meet certain criteria, including adopting a capital-improvement plan and showing that exceeding the limit would save them money in the long run. They still would have to get voter approval for the bonds.
Rodriguez said the bill will enhance local control and give flexibility to districts like Del Valle, which he represents, that are growing rapidly but nearing the 50-cent limit.
“It’s a crisis for some school districts for sure,” he said. “A lot has changed since 1991, so I think this will really be helpful to schools – if the local voters support their bond packages.”
Legislation to allow districts to exceed the cap has been proposed before with no success. But with the problem getting worse and the complexities of school finance expected to take a back burner during next year’s legislative sessions — as lawmakers await the outcome of a lawsuit challenging the state’s funding method — the coalition is hoping 2015 is the year to get lawmakers to address the debt limit, which they say will only hurt more districts unless state funding for new facilities increases substantially.
More than 600 districts filed suit against the state in 2011 after lawmakers cut some $5.4 billion from public schools. The state appealed a ruling in late August by Austin state District Judge John Dietz, who struck down the state’s school finance system as unconstitutional – in part because of inadequate funding. A ruling by the Texas Supreme Court is not expected before late next year.
“I don’t think anyone expects the Legislature to really try to focus on school finance because of the pending lawsuit, so outside of transportation, water and mental health, I think this is a great opportunity for our representatives to take advantage of looking at growth and how it impacts our local school districts,” said Hays Consolidated Superintendent Michael McKie.
But experts and insiders cast doubt on the measure’s chances of passing the Republican-dominated, debt-loathing Legislature. Escalating local debt has become a hot talking point for some conservative politicians. Schools say the problem is declining state funding.
Jess Fields, a senior policy analyst in the Center for Local Governance at the conservative Texas Public Policy Foundation, said, “We have significant concerns about any attempt to allow more debt to be issued to burden Texas taxpayers.” The Austin-based think tank keeps pressure on Republican lawmakers to pass conservative policies and legislation.
Fields said recent bond elections have shown that school districts are inappropriately financing short-term items — such as computers and buses — or extravagant, non-instructional items, like multimillion dollar football stadiums. Districts should re-examine their spending before asking for more, he said.
But some note Rodriguez’s bill is more restrictive than past unsuccessful legislation that would have allowed all types of districts to bypass the cap. And superintendents say the problem is only getting worse, particularly after lawmakers slashed state assistance for new facilities in 2011 and have yet to restore it.
Dale Craymer, president of the Texas Taxpayers and Research Association, said the proposed legislation “takes a more responsible approach to a very sensitive issue” because of its restrictions, and so it may be more appealing to lawmakers. However, he said the association may like to see even more restrictions before it decides whether to officially support the bill.
“I think this approach is certainly more palatable than simply lifting the cap, although we might be interested in seeing some type of parameters for prioritizing instructional facilities in the capital plan,” he said, referring to the provision in Rodriguez’s bill that requires districts to craft programs for major projects.
While some school districts have passed extravagant bond packages, that is not the case for most districts, said coalition Executive Director Michelle Smith.
“What’s happened is, over time, the state has decreased their support and Texas has been growing by leaps and bounds so those (tax) rates have been going up primarily in fast-growth districts,” she said. “They’re not able to create enough property wealth to keep up with the growth that they’re seeing.”
Smith’s father, state Rep. Jimmie Don Aycock, a Killeen Republican who chairs the House Public Education Committee, filed a bill in 2009 that would have let districts exceed the cap under certain circumstances. It was left pending in the committee he now chairs.
Two years after that, facing a massive projected budget shortfall that later was revealed to be grossly overestimated, lawmakers cut roughly $5.4 billion from public schools, defunding a program that provided per-student funding to districts building new facilities while injecting no new money into another program that helps mostly poorer school districts with debt service payments. The overall cuts were partially, but not completely, restored in 2013 — not including those programs.
Scott Hochberg, a former Democratic state representative from Houston and school finance expert who in 1995 passed the state’s first program to assist districts with facilities construction, said Rodriguez’s bill “will help districts,” but that “the real answer is for the state to honor its obligation to fund the schools — not just for operations but for facilities.”
“The population growth that leads to economic growth in this state does have costs, and the state needs to meet its obligation to deal with those costs,” he said.
CORRECTION: This story has been updated to correctly describe the length of time that the Fast Growth School Coalition has been pushing for changes to the state limit on local school debt.
Austin-area districts at or nearing the 50-cent debt service limit in 2013, and their tax rates:
Del Valle – 43 cents
Dripping Springs – 45 cents
Hays Consolidated – 49 cents*
Hutto – 50 cents
Lake Travis – 36.75 cents
Leander – 47 cents
Liberty Hill – 50 cents
Manor – 48 cents
Pflugerville — 50 cents
Round Rock – 32.74 cents
*After bond package passed in May
Defining ‘fast growth’
The definition of a fast-growth school district, according to the Fast Growth School Coalition:
- Enrollment of at least 2,500 students during the previous school year.
- Enrollment growth over the last five years of at least 10 percent.
- A net increase of 3,500 or more students.