Yesterday The Community Impact posted “Leander
ISD tackles debt”. (A
link to the article is here -- https://communityimpact.com/austin/leander-cedar-park/education/2016/09/14/leander-isd-tackles-debt/
) The article commends Leander ISD board
members and administration for improving the district's debt situation and working with
Texas lawmakers to improve a new law concerning school debt financing.
In 2015 the Texas Legislature passed HB 114. The law limits
the use of Capital Appreciation Bonds (CABs) by school districts to 25% of
total debt and limits the bonds to a maximum term of 20 years. Representative Tony Dale of Cedar Park was one
of the co-authors of the bill and noted in the article that Leander ISD was at
an astonishing 70% debt funding through CABs. The use of CABs had
become a significant concern not only in Leander ISD but throughout Texas and
other states like California and Michigan.
Opponents to CABs saw the liability balloon that was being created with bonds
where interest was being deferred far into the future, thereby risking future
financial soundness and passing current expenses on to future students and
taxpayers decades into the future.
During the 2013 Leander ISD School Board elections the
incumbents faced mounting pressure from constituents over the use of CABs. An example of the concerns from 2013 can be
found here -- http://watchdog.org/114596/texas-schools-pass-debt-next-generation/. Pam
Waggoner, Grace Barber-Jordan, and Russell Bundy were all re-elected to the board
despite debt financing concerns, and these three members are again running for
re-election this year. The Community
Impact article is timely relative to the ongoing fiscal management of Leander
ISD and the upcoming elections.
Due to the passage of HB 114 in 2015 school districts like
Leander ISD are forced to change their debt financing practices. It is a positive step that we are no longer
discussing whether Leander ISD should continue to utilize large amounts of CABs
and instead are finding sounder ways to finance the debt of the growing district. Many Texans would have preferred the issue to
be resolved locally without taking corrective action through statewide
legislation; however, Texas lawmakers have prudently directed school districts
back toward fiscal soundness.
The Texas Comptroller’s website provides more information on
Capital Appreciation Bonds (CABS) along with pros and cons -- http://comptroller.texas.gov/fiscalnotes/march2016/cab.php.
