This article presents insights on state policy makers’ apparent expectations of greater support from local taxpayers in passing local bond referendums to fund additional instructional campuses. As shown in the chart below, the percent of state revenues to bond debt expenditures in the debt service fund has substantially declined from about 31.9% fiscal year 2002 to 11.2 % fiscal year 2013.
According to the chart below, the number of students served by school districts grew by 850,000 from school year 2001-2002 to 2013-2014. This is the equivalent of adding four school districts the size of Houston ISD, which has 274 instructional campuses according to the latest Texas Education Agency Snapshot publication.
According to the chart below, the annual state aid allotment that subsidizes debt expenditures in the Debt Service Fund has declined by about $150 million, from $766 million in fiscal year 2002 to $619 million in fiscal year 2013.
Clearly, state policy makers are expecting increasing support from local taxpayers in funding instructional facilities.
This article is the second in a series that presents insights on state policy makers’ apparent expectations of greater economic support from local taxpayers in relation to facility funding in the public school system of Texas. The elimination of the New Instructional Facility Allotment (NIFA) by the 2011 Legislature is another aspect of this public education funding issue. The elimination of the allotment has significantly complicated school districts’ decision-making processes involving facility planning and overall financial management.
As shown in the chart below, school districts have added only 31 instructional campuses to accommodate an increase of over 174 thousand students from school year 2009-2010 to 2012-2013. The chart readily shows an historic slowdown in the expansion of instructional facility infrastructure while student enrollment continues to climb.
In 2011, the 82nd Legislature ceased to fund the New Instructional Facility Allotment (NIFA) thereby shifting this funding obligation to local taxpayers, which especially affected high-growth school districts, including those surrounding the Dallas-Fort Worth, Austin, San Antonio, and Houston metropolitan areas. The NIFA allotment, enacted by the 76th Legislature in 1999, provided $250 per student in average daily attendance (ADA) in the first year of operation of the new campus, plus $250 for each additional student in ADA in the second year of operation. The loss of this allotment has caused school districts to delay construction projects as they balance the need to temporarily increase class sizes and use portables with their commitment to follow certain financial management strategies, including a balanced budget in the General Fund.
School districts are in a catch-up phase to expand the infrastructure needed to serve an increasing number of students. Public school funding formulas can be changed with the stroke of a pen; however, it takes two to three years from the initial decision for new construction to the point in time that the district receives a certificate of occupancy. In 2014 and future years,local taxpayers will be increasing their economic support of school districts efforts to add instructional campuses and other facilities, as the local population grows and as businesses migrate manufacturing facilities and operations, in addition to administrative headquarters to Texas.
This article is the third in a series that presents insights on state policy makers’ apparent expectations of greater economic support from local taxpayers in relation to facility funding in the public school system of Texas. The funding weights for the existing debt allotment in the Texas Education Code that help school districts pay principal and interest costs on facilities debt have not changed, since 1999. What are the economic consequences to local taxpayers as a result of long-term public policies related to state aid facility funding allotments? Is there a correlation between Interest and Sinking tax rates (debt service tax rate for bonded indebtedness) in school districts that have higher rates of growth in student enrollment?
According to the table below, the I&S tax rate was 100% greater in fiscal year 2013 for local taxpayers in school districts that have a 50% or greater increase in student enrollment over a ten-year period.
|I&S Tax Rate Statistics for FY 2013|
|Number of ISDs with a I&S Tax Rate for Bonded Indebtedness||812|
|Median I&S Tax Rate All ISDs with an I&S Tax Rate||20 cents|
|Median I&S Tax Rate for ISDs with 10-Year Growth in Students > 50%||40 cents|
The statistics in the table above show local taxpayers are providing increased economic support where the need is the greatest to construct additional instructional campuses and other facilities. Considering the revenue-neutral position of state policy makers involving state aid funding formulas for facilities, local communities have readily stepped up to support their public schools. Until state policy makers act to adjust funding formulas to match local needs for the expansion of infrastructure, the leadership in local communities will continue to make a difference in supporting public education.
This article is the fourth in a series that presents insights on state policy makers’ apparent expectations of greater economic support from local taxpayers in relation to facility funding in the public school system of Texas. There has been extensive coverage of the costs to educate public school students in Texas and how certain costs are reportedly being “pushed off” to future Texans, including costs to pay debt principal and interest. Statements, articles and reports from certain sources have led many Texans to believe that borrowing and spending levels will soon be out-of-control if they are not better informed.
“Educating Texans is becoming increasingly expensive.”
Texas is ranked 47th, near the bottom in spending per student, according to National Education Association report Rankings of the States 2013 and Estimates of School Statistics 2014. http://www.nea.org/assets/docs/NEA-Rankings-and-Estimates-2013-2014.pdf.
Educating Texans is pretty darn cheap.
Debt growth is a problem when compared to enrollment growth and inflation (CPI).
Student enrollment growth does not have a cause and effect relationship on the rate of increases in labor and materials related costs for building construction. Construction costs have risen over the last decade independent of increases and decreases in the local population or student enrollment.
The CPI measures common consumer goods price increases and is not a valid measure of construction cost increases.
A more accurate assessment of the cost of construction is found in the 2012 School Planning and Management Report. The report shows that high school costs grew by 93% and middle school costs grew by over 73% for the decade ending 2011. These cost increases far exceed CPI cost increases for the same period.
According to the chart below, school district debt over the past decade has been relatively stable in the context of total taxable value. In years past, the state capped the ratio of outstanding debt to taxable values at 10% or less. Though replaced by the “50 cent debt test” as a means test, the ratio still remains a key indicator that is noted by bond rating agencies. The current ratio is 4%.
Local governments make it hard for you to see their books.
School districts’ “books” have been readily accessible to the entire world for many years. For the past decade, audited financial statements and financial measures, including debt borrowing, for all school districts and charter schools have been readily accessible at the link http://tuna.tea.state.tx.us/audit/PDFviewer.asp.
For many years, many school districts’ audited financial statements have also been readily accessible on their public web sites.
Texas lacks a coherent state-level economic public policy that addresses various kinds of infrastructure costs that are associated with population growth. These costs are increasingly being supported by local taxpayers, as shown in Parts 1-3 of this series of articles. Local taxpayers are readily stepping up to the plate to finance construction costs primarily through the issuance of voter-approved debt also referred to as bonded indebtedness. Increasing levels of debt at the local level flow from the lack of a coherent public policy about financing infrastructure in local communities. School districts in many locales are tasked with complex financial management and facility management decisions that are significantly complicated by the lack of any significant changes for two decades to state statutes related to public finance for facilities.