Updated: Mar 25, 2021
The other day at was the aquatic center talking to a friend and he made a comment about how property taxes keep going up. So I took a look at our tax bill.
It is not a surprise that the biggest item is “919 Carroll ISD”:
When looking at the historical Tax Rates for CISD it appears that taxes rates are decreasing over the years:
Obviously this is only half of the story because our Property values keep appreciating at a higher rate than Tax Rate reduction:
This calculation assumes a Property appreciation of 5% per year. We all know that Property appreciation in Southlake is much higher.
Our School Tax Rate has two components: Maintenance and Operation (M&O) and Debt Service. M&O are the funds to pay for the day to day operation of the school district (Including Salaries). Let’s take a look at the Debt Service rate. These funds are used to pay for ALL the BONDS issued in the past. In simple terms we are paying off a mortgage for the district.
Currently the balance of CISD Debt Service it’s $482,832,412.55 extending all the way to 2044! In just interest alone the balance is $142,002,412.55!
If I’m elected as a member of the board I will prioritize efforts on the following three Policies and Strategies:
1. Restructure high rate bonds
2. Reduce Principal by 50% in 10 years.
3. Establish a fund to purchase assets to avoid issuing bonds in the future.
Strategy 1 Restructure High Rate Bonds.
Building Bonds 2010 should be at the top of the list to refinance at lower rates. This strategy will engage the Finance and Budget Committee; these are experts in the field and are eager to help. Many of us took advantage of a recent drop in interest rates to buy a larger house or refinance, the district needs to look at options to refinance our high rate bonds to try to avoid paying 142 million dollars in interest!
Strategy 2 Reduce Principal by 50% in 10 years.
Once our debt is restructured we will utilize excess funds to Retire principal as quickly as possible. This strategy will have a direct impact on the $22M of interest due after year 2032.
Strategy 3 Plan for the Future
We need to create and maintain a fund for Non Bond Capital Expenditure. This is probably the most important long term Financial Strategy that we should adopt! Unallocated funds that result from savings and synergies should be allocated to this fund. There is nothing more financially irresponsible than using Bond funds for the purchase of Laptops and Ipads, or for the purchase of building air conditioners knowing that we will pay them for 30 years (plus interest).
I will share a story from a Finance and Budget Committee meeting; someone thought that purchasing air conditioners with bond funds was a great idea because it reduced maintenance expenses and therefore saved M&O funds. My head was spinning!! It’s like saying “I’m going to buy a new car because my car needs an oil change. If I buy a new car I will save money on an oil change”.
There is nothing wrong with issuing Bonds but it’s irresponsible to issue Bonds without the proper justification and ROI analysis.