How I learned to Stop Worrying and Love the BondOpinion
OPINION — The only way you’d see me vote for a Democrat is from my grave, like most Democrats vote, since circa LBJ. I own a business in San Angelo and I pay property taxes here. I live inside the Christoval ISD taxing jurisdiction and also pay taxes there on my homestead.
Likely my largest property tax liability, however, is the business properties my wife and I own inside the San Angelo ISD. And the tax amount is not fun to pay, especially with kids in college and that additional expense.
I have lived many places in my life and have experienced living in various communities, some of them different, but most pretty much the same as San Angelo. These were thriving communities and inward-looking towns where a lack of vision has killed its economic prospects. As a business owner in San Angelo, I want this community to thrive.
We cannot thrive with lackluster school facilities.
In smaller cities, there is some sort of glass bubble over them. Some citizens believe, for example, that it is still 1955 in San Angelo, and forget that the rest of the world is dealing with 2018. This creates a sort of superhero complex with some citizens.
One example of the superhero complex with (particularly liberal) San Angeloans surfaced during the debate over what to do about eliminating curbside recycling last month. The recycling program is under review because the market for recyclables has crashed and we might as well throw away our plastic bottles and newspapers because no one will buy these things, especially not China.
With great confidence, some citizens took to the public stage and demanded that little ‘ol 100,000 population San Angelo “set the standard for the rest of the world” by continuing to recycle and single-handedly solve the worldwide crash in the market for recyclables. Somehow.
That’s not going to happen. And San Angelo is not going to single-handedly change the convoluted school finance system set by current State law either.
Let Frisco ISD or Austin ISD get that ball rolling. Meanwhile, we are dealt the hand we have from the State Legislature and the rules are if you desire to build new buildings or replace old buildings, you have to take out a bond.
School finance structure is divided into two buckets. One bucket is Maintenance and Operations, or M&O, where about 95 percent of that money is earmarked for teachers’ salaries… and administrators’ salaries. The other bucket is called Interest and Sinking, or I&S. This is the money the school district raises via debt and pays it off over long periods of time in interest and principle payments. I&S money builds stuff, like new schools. Teachers’ and administrators’ salaries cannot be paid out of I&S funds. Bonds cannot be financed with M&O funds.
You cannot build a new elementary school by slashing the superintendent’s salary to $20,000 per year, as superheroes suggest (you won’t find a superintendent for $20,000 a year either).
Another superhero statement I hear often is, “Why doesn’t the San Angelo ISD pay off its existing bonds before asking for more money?”
At the end August 2017, the San Angelo ISD had about $106.8 million in long-term debt from previous bonds, according to the Dec. 2017 audited financial report (p. 67 here). The total bonds payable started out at $221 million. $117.9 million of that was from the 2009 bond election that provided funding for significant improvements across the district. Then there is a little over $100 million in refinanced debt in 2015 of bonds existing prior to 2009. The district captured very low interest rates by refinancing three years ago.
All of the principle and interest on these bonds are paid with the I&S portion of your property taxes. Again, the San Angelo ISD owes $106,760,000 on all bonds right now. Paying for the current debt costs taxpayers $0.17 of the $1.21 total San Angelo ISD portion of your property tax bill.
You don’t divide your household budget into separate M&O and I&S funds and you don’t have the big bad State of Texas meting out additional funds to supplement your M&O funding either. Superheroes should stop comparing a convoluted school finance structure to your household budgets!
You cannot save much over time from M&O to pay for big projects, either. If ExxonMobile built a refinery inside the San Angelo ISD taxing jurisdiction and provided a $10 million annual windfall to the school’s property tax intake, it wouldn’t matter, and we probably couldn’t keep it. The State would swoop in here and take away their current level of subsidy or, worse, and like they did to Midland ISD, take that money away from us. Our M&O will likely remain at the same $100 million or so that it is. That’s the way the State of Texas law is.
An elementary school costs $20-25 million to build. At the current rate of savings from our M&O, it will take 8 to 9 years saving the $3 million in excess we’ve enjoyed in annual budgets so far to build a new McGill Elementary School, for example.
Meanwhile, we’d be denied $3 million annually we have been using from our excess M&O otherwise to make small capital improvements or maintenance tasks like to renovate Glenn Middle School’s bathrooms or build new tennis courts.
On the other hand, approving both bonds will provide us with effectively four new elementary school buildings and a much-needed multi-purpose gym facility at Central High School’s campus.
To get there, approving both bond proposals will increase the bond debt from $106.6 million to around $252 million. Paying for the increased debt will increase the I&S tax rate from $0.17 to $0.31, making the combined tax increase from $1.21 to $1.35. The net impact to a property in San Angelo valued at $200,000 is a tax increase of $245 annually.
That is not a small sum of money, but it’s not that large either, when you consider the economic benefits. Consider how this will enhance the value of our community, and your property values, too.
When I transferred to Barksdale Air Force Base in the mid-1990s, we had the option to buy a small, 1700-square-foot home in the area where a Blue Ribbon School named Stockwell Place Elementary was located. It was a brand new building, and part of the Bossier Parish Schools. We passed on that neighborhood, and instead, built a larger home east of there inside the small town of Haughton schools. Economically, the decision was a poor one. The smaller homes in Stockwell Place subdivision increased in value $20,000 to $25,000 during my four-year tour there. My custom-built home within the smaller school district without the Blue Ribbon status, and in much older facilities, increased marginally in value by about $10,000.
Parents moving to Bossier City wanted to live in the Stockwell Place Elementary’s School district and the increase in the price of the real estate revealed this.
A healthy real estate market demands great schools with good facilities.
Part of the reason there is a high cost to these bonds is because the school district believes San Angeloans desire to keep and maintain its community-based elementary schools. The alternative is to close down many of the neighborhood schools and build one or two large elementary schools that can be operated much more efficiently as replacements. This concept has been tried in Del Rio.
It was a failure.
In the early 2000s, the San Felipe-Del Rio Consolidated ISD built a large, consolidated middle school to save money. The perception of my colleagues at Laughlin Air Force Base of the very large school was that the teachers had less control and the discipline and academic achievement suffered. The thought of my kids having to attend that school was a primary motivator for us moving away from Del Rio.
Scores for Del Rio Middle School confirm my decision was a good one. The school ranks consistently low in school rankings. https://www.greatschools.org/texas/del-rio/9505-Del-Rio-Middle-School/
Investing the right way in public schools is a primary motivator for people wanting to move to a community. This proposed bond, with its emphasis on community elementary schools, is a smart choice.
As a journalist, I have covered school boards in Dallas, San Angelo, and Del Rio. From that experience, I know San Angelo ISD’s leadership is solid. A typical Texas ISD superintendent tenure lasts about three years. Whether it was a large urban area or smaller community, school boards were rife with drama and alleged corruption.
The San Angelo ISD is an outlier in this regard. The board is strong and stable under the long-term tenure of Board of Trustees President Lanny Layman. The board made an excellent hire in Dr. Carol Ann Bonds in the late 2000s and, because of the stability of leadership the board provided, she was able to hire several great candidates to replace herself when she retired.
Her selected replacement, Dr. Carl Dethloff, is an excellent superintendent who has built a strong management team around him ensuring more years of leadership stability. How many Dallas Metroplex schools experience a turnover of a new superintendent every two to three years?
Of particular note on Dethloff’s team is the CFO for the San Angelo ISD Jeff Bright. He has proven himself to be outstanding in managing San Angelo ISD finances. He has done so in a very transparent way. Everything you want to know about San Angelo ISD finances is available online if you know what you’re looking for.
The improvements listed in the bond proposal will still be needed whether we approve these bonds Tuesday or not. The question is, do you want to be forced to have another bond election in a decade when the current excellent management team is retired, or strike now while it is hot?
If anyone is going to have a clear shot to properly manage $148 million in construction projects, it is the team in place at the San Angelo ISD right now.
With long-term interest rates on the rise and the cost of construction increasing with inflation, how much will the $148 million in today’s cost of the improvements (as proposed) cost in 2028?
I hate tax increases. But I know a vibrant, attractive San Angelo economy demands great schools. Investing in the public schools here requires adherence to the very bad school finance system the State of Texas has in place. We cannot change it in time to enjoy benefits of new facilities needed now. On the other hand, our local control of San Angelo ISD has produced an excellent leadership team in whom I am confident will excel with the new projects proposed. I’d rather pay now than take a chance on losing badly later.
Vote Yes to both San Angelo ISD bonds.
Vote Yes to Christoval ISD's bond, too. That district desperately needs an elementary school building.