A bond is similar to a home mortgage. It is a contract to repay borrowed money with interest over time. Bonds are sold by a school district to competing lenders to raise funds to pay for the costs of construction, renovations and equipment. Most school districts in Texas utilize bonds to finance renovations and new facilities.
School districts are required by state law to ask voters for permission to sell bonds to investors in order to raise the capital dollars required for projects such as renovation to existing buildings or building a new school. Essentially, the voters are giving permission for the District to take out a loan and pay that loan back over an extended period of time, much like a family takes out a mortgage loan for their home. A school board calls a bond election so voters can decide whether or not they want to pay for proposed facility projects.
Bond funds can be used to pay for new buildings, additions and renovations to existing facilities, land acquisition, technology infrastructure and equipment for new or existing buildings. Bonds cannot be used for salaries or operating costs such as utility bills, supplies, building maintenance, fuel and insurance.
Panhandle ISD passed a $27,500,00 bond in 2007. The bond was a 30 year bond that the district paid back in 17 years saving taxpayers millions of dollars in interest. Phase I of the bond was the building of a new elementary school, computer and science labs for the middle and high school, several new classrooms, a high school/middle school library and a high school/middle school cafeteria.
The Panhandle Board of Trustees during their strategic planning process identified hiring and retaining quality staff members as one of their priorities. In order to compete for a diminishing teacher and support personnel pool salaries were identified as an area that needed attention. Capital Expenditure bonds provide a reliable source of funding to pay for infrastructure needs. The Board of Trustees decided to ask the voters to help them move items that usually would be paid for out of the school district's regular maintenance budget to debt service. This will allow the district to use money that would normally go to maintenance projects to be diverted to salaries.
19.2 million over ten years
The Panhandle Board of Trustees chose a committee of local citizens who did a needs assessment of the district facilities and presented a recommendation to the board in June.
Likened to a home mortgage, a voter-approved school bond allows a school district to borrow funds. The Board of Trustees authorizes bond elections, and State law grants the Board the authority to sell bonds.
A school district’s tax rate consists of two parts:
a) Maintenance and Operations (M&O) which funds the General Operating Fund, which pays for salaries, supplies, utilities, insurance, equipment, and the other costs of day-to-day operations; and
b) Debt Service (Interest & Sinking or I&S) which can be used for a variety of special purposes, assuming voter approval. For example, they may finance facility construction and renovation projects, acquire land, or purchase capital equipment, such as technology, and vehicles, such as buses
Bonds allow for districts to spread the cost of expensive projects across time without affecting the district’s normal educational operations. Also, bond funds all stay with the district, and they are not subject to state recapture, fluctuations in revenue due to state mandates, or other negative economic influences.
In short, bonds save and protect taxpayers while allowing for essential, ongoing facilities development and other capital expenses to be funded
Voters approve a specific dollar amount— or the maximum amount the district is allowed to sell without another election.
The school district may then sell their bonds as ‘municipal’ bonds when funds are needed for capital projects, usually once or twice a year.
The interest rate paid is based on the district’s bond rating and the interest rates in effect at the time of sale.
Districts benefit if they have a higher bond rating, meaning a lower interest could be charged. Principal and interest on the bonds are repaid over an extended period with funds from the Debt Service tax rate.
1) bond authorization that specifies the amount of bonds the district is authorized by the voters to sell, and
2) bond sales that may occur over a period of time with the date and amount of each sale determined by the Board on an as-needed basis.
Would the district be able to make some of the purchases as soon as the bond has passed? Yes generally, the General Fund can pay for bond related soft and hard costs prior to the receipt of the proceeds from the first bond sale from the election. The District should adopt a Resolution Allowing for Reimbursement at approximately the same time as an expenditure is expected to occur. Note that under Federal Tax Law, the District does not need a Reimbursement Resolution for soft costs but does for hard costs.
What is a feasible time to get started on any construction kind of projects?
Generally, the design work and other measures such as surveys, soil tests, etc. will begin soon after the bond election passes. I do not want to speak for the architects, but the design phase can take 4 to 6 months, with bidding and construction shortly thereafter.
Can the district start a project before the end of the 2023-2024 school year?
There will not be any I&S tax collections until 2024/25, but that will not prevent them from issuing some of the bonds in 2023/24, and it will not prevent you from proceeding with acquisitions and design/construction/bidding/etc. in 2023/24.
Panhandle ISD can raise money through the sale of bonds, through a tax ratification election (TRE - an election to raise local taxes) or with fund balance. Panhandle is considered a property wealth district and therefore is subject to recapture. A TRE is not an option at this time for the district. Bonds are not subject to recapture and are the more logical approach to raising revenue. The state of Texas dictates how much money a district should keep in its fund balance and it is not intended to pay salaries or benefits.
The Panhandle Board of Trustees decided to pay the staff in the district the extra money provided in House Bill 3 in the form of cost of living adjustments and benefits. The state of Texas dictated how this increase in revenue was to be spent.
Visit the Bond 2023 website to see a breakdown of each proposition and more information about the Bond 2023.
PISD is complying with new Texas legislation, which requires school districts to have separate propositions for certain projects such as athletic upgrades and technology improvements. The ballot will contain three propositions, including Proposition A, Proposition B and Proposition C.
The district is here to answer any factual questions about the bond. District personnel can not advocate for or against the bond.
In Texas schools are funded based on enrollment. Panhandle ISD is similar to other smaller districts in rural Texas. Our enrollment has remained flat and slightly decreased meaning that our revenues have not increased in many years. If the bond is not approved the Board of Trustees will struggle to compete with surrounding districts for hiring and retaining teachers.
The State Property Tax Code allows for school property taxes on an individual homestead to be “frozen” at the age of 65. If you are 65 years of age or older and you have filed for the “Over 65 Homestead Exemption”, there is a ceiling on the amount of school taxes to be paid. The only exception is if improvements are made to a home. As such, a tax increase from a new bond program cannot increase the applicable tax ceiling of a taxpayer that has qualified for the “Over 65 Homestead Exemption” unless improvements are made to the home.
If voters approve $13.1 million for Proposition A in November, the estimated impact would be $3.98 per month for a home valued at $150,000 in Panhandle ISD. If voters approve $5.6 million for Proposition B in November, the estimated impact would be $1.71 per month on the same home. If voters approve $500,000 for Proposition C in November, the estimated impact would be $0.15 per month. If voter approve all three propositions the impact would be $5.84 per month.
State law requires this language on all school bond referendums. If economic conditions in the district became adverse, the district would be legally required to levy an I&S tax rate sufficient to repay the bonds. Equally if the conditions improve the I&S tax rate could be reduced accordingly.
Any registered voter who lives within the PISD boundaries — and whose voter registration is based on their current PISD residence — is eligible to vote in this bond election.
The deadline to apply for voter registration is October 10 in order to vote in the November 7, 2023 election.
War Memorial 500 Main Street Panhandle, Texas 79068