What is a bond?
A school bond is not unlike a long-term mortgage on a home. The school district is asking its voters to be able to borrow a specific amount of money, in this case, up to $3.7 billion dollars, over the next ten years. Upon a November 2020 authorization by the voters, the district will then begin to sell tax-free municipal bonds as needed to finance the construction of projects approved by the board during that ten year time frame at then-market interest rates with repayment terms in the 30 to 40 year range.
The amount raised by the selling of these bonds can only be put towards capital projects, meaning the construction and renovation of school facilities, as well as transportation, technology, equipment, and land acquisition.
Why $3.7 billion?
The district conducted a complete facility assessment in late 2018 that identified needs and organized them into four priority groups. By authorizing a bond of over $3 billion, the district can cover its most pressing needs in full, as well as begin to proactively address longer-term issues.
For the past year, a Citizens Bond Steering Committee made up of over 100 community members selected by the district’s elected school board trustees has been meeting regularly to plan for a bond issuance. They have studied the aforementioned Facility Assessment, visited district properties, and heard input from stakeholders to develop a plan of action. Their recommendations went to the Superintendent and school board for final approval.
Will my tax rate go up?
Absolutely not. Dallas ISD trustees and staff have been responsible stewards of taxpayer dollars, and existing debts continue to be paid off on or even ahead of schedule. This means that an increase in the amount of debt taken on will not necessitate a higher tax rate in order to be paid off within the legal timeframe. Overall taxes may rise depending on changes in underlying property values as determined by Dallas County’s appraisal district.
If my tax rate won’t go up, why does the ballot read “THIS IS A PROPERTY TAX INCREASE”?
A state law passed last year now requires every ballot for a school district bond to read “THIS IS A PROPERTY TAX INCREASE,” (emphasis theirs) regardless of the actual impact on that district’s tax rate.
In Dallas ISD’s case, this is true only in the sense that, without the passage of a bond, the interest and sinking tax rate could theoretically eventually be reduced as existing debts are repaid. However, in doing so, the district and its taxpayers will only be incurring additional costs as deferred maintenance costs continue to accrue, and underlying property valuations may likely decline due to the district being viewed as lesser quality due to aging, declining facilities.
Didn't the school district just hold a bond election? What is the status of those projects?
The school district last held a bond election five years ago in 2015. The approved $1.6 billion issuance funded over 110 capital projects, 70 of which have been completed in full. Click here for a detailed list.
Even though a tax rate increase is not being requested today, how can taxpayers be sure that an increase won’t be requested in subsequent years for Dallas ISD?
- Dallas ISD’s current tax rate is $0.24 per $100 of taxable value, a rate that has been in place since 2014. Following the district’s 2015 bond authorization of $1.6 billion, the district’s tax rate remained intact and was never increased in subsequent years.
- Projected interest rates assumed by the district of 4-5% are conservatively 2x higher than what the current tax-exempt bond market is requiring today.
- In addition, the underlying property value growth estimated by the district to be applied to its tax rate is projected at 4% in Year 1 and is conservatively estimated to steadily decline to just 1% over the next five years. This is a conservative approach considering that recent valuation growth rates in Dallas ISD’s tax base have averaged 7-10% over the last 3-4 years.
- Most importantly, the district and its board control the pace of construction and can always slow down building activity and associated debt issuance, if necessary, to ensure that the current $0.24 I&S tax rate remains sufficient to cover any and all debt obligations.
How often do school districts propose bond packages? Is there a science to how frequently these should be requested?
In the last ten years, North Texas school districts have held 90 school district bond elections, and 76 of those passed. 25 of those districts– those with the highest student populations– passed more than one. Fort Worth ISD – a district smaller in size and enrollment than Dallas ISD – passed four.
There is no science to how often a district should propose a bond, but one can expect district enrollment, geographic size, and facilities conditions to significantly impact the need for adequate, equitable funding.
When is the election?
Early voting will take place from October 13th to October 30th. Election day is November 3rd. You must be registered to vote by Oct. 5th. For more information, see dallascountyvotes.org.
By voting YES, what am I authorizing?
It’s important to note that a YES vote simply authorizes the elected school board to periodically issue bonds up to the collective amount authorized. Each contemplated project - its budget, its scope, the contractors who will be performing the work - must be authorized in the future by the elected school board based on current needs, circumstances, etc.
What happens if the bond authorization does not pass?
District officials would be forced to put off meeting high-priority facilities needs, subjecting students and staff to substandard resources and likely making their eventual cost higher in the long run. The 2015 bond only covered a fraction of maintenance needs determined at that time to be high-priority, deferring those investments for the future. Without the passage of this bond, maintenance costs will accumulate and could present drastic consequences for student outcomes. Additionally, other planned investments in classroom and community resources, broadband access, and new campuses and career-focused centers (among other things) stand to slow or halt indefinitely.
How will this initiative enhance our community’s racial equity efforts?
A large majority of Dallas ISD students are Black and Latinx, and all investments being planned are to the benefit of their safety, well-being, and educational and career success.
For example, the planned “Student and Family Resource Centers” were developed using the newly created Community Resource Index, which seeks to identify needs in historically underserved neighborhoods of our city. These strategic investments could ultimately make a significant impact by using district-owned facilities as community hubs to close racial gaps and disparities in healthcare, housing, and employment.
How will my neighborhood school benefit?
The historic size of this bond means that nearly every Dallas ISD campus will be impacted in some way, whether through modernization, renovation, or complete rebuilding. For more information, see the Map of Bond Projects above.
Is this a ‘Democratic’ or ‘Republican’ issue?
No. As with all school district ballot measures, including the election of school board trustees, this is a completely nonpartisan vote. All voters will see Props A-E toward the end of their ballot.
What is Dallas ISD’s current debt level and how does its current I&S tax rate responsible for servicing its issued bonds compare to surrounding districts?
Dallas ISD’s current bond debt outstanding Is $2.8 billion, or about $18,000 per student.
Dallas ISD's current interest expense is about $120 million annually, equivalent to roughly 4.3% on its $2.8 billion of debt outstanding. As evidence of the substantial interest rate savings for debt issued in this current environment, Dallas ISD just issued $300 million of debt associated with its 2015 bond at an interest rate of only 2.02% in July, 2020. If the proposed Dallas ISD bond is approved, Issuing debt at today’s unprecedented and historically low interest rates will allow tax dollars to be stretched substantially farther for the benefit of Dallas ISD students.
Dallas ISD’s current I&S tax rate, which is responsible for providing funding to service Dallas ISD debt associated with its bond issuances, is just $0.24 per $100 of underlying property valuation. When applied to taxable values per student within Dallas ISD, Dallas ISD’s I&S tax stream per student of roughly $1,800/student ranks only 24th among North Texas public school districts and is roughly 1/3rd of the I&S taxes per student paid by Highland Park ISD taxpayers and roughly 1/2th of the I&S taxes paid by Grapevine and Carroll ISD taxpayers, respectively.
With ~153,000 students, Dallas ISD is the second-largest school district in Texas and the 16th largest district in the country, and generally any bond election it participates in will be quite large by nature. To put $3.7 billion in perspective, it equates to roughly $24,200 per current Dallas ISD student for a district with a relatively stable enrollment across its 232 campuses.
To help draw a comparison, other recent bond authorizations approved by boards and/or taxpayers from districts of varying enrollments that have also reflected stable enrollment growth are as follows:
Dallas ISD’s current bond debt outstanding approximates $2.8 billion, or approximately $18,000 per student. It is currently being repaid at a rate of roughly $176 million per year and will be fully repaid in less than 15 years.
Dallas ISD's current interest expense is ~$120 million annually, equivalent to roughly 4.3% of the bond debt outstanding. To minimize interest payments, the district has taken advantage of the historically low interest rates available in the current market, and just recently issued $300 million of debt associated with its 2015 bond at an interest rate of only 2.02% in July 2020. If the proposed bond is approved by voters on November 3rd, the ability to issue new debt at today’s unprecedented and historically low-interest rates (vs. wait until a later time) will allow taxpayer dollars to be stretched substantially farther to greater benefit students, staff, schools, and communities.
