ALVIN – A good 10 miles out past the farthest reaches of Houston’s vast outskirts, there’s a town called Alvin (pop. 25,000) that’s best known for its wild animal park. But if school officials get their way, Alvin will be known for building five of the most expensive elementary and junior high schools Texas has ever seen.
To pay for those schools, Alvin Independent School District would like to issue some bonds that would shoot it past San Antonio ISD as one of the state’s most indebted school districts – and not merely per capita. District residents would be on the hook for roughly $1 billion, counting interest payments, in a district that has about $6.5 billion in taxable property.
To put it in household terms, if you’ve got $40,000 in equity on a $260,000 house, actually you’ve got nothing. That’s how much you owe the school district.
The bond issue on the November ballot will make possible five of the most expensive elementary and junior high schools ever built in Texas, a second football stadium for the two high schools (a third is on the way), a $45 million career center, and a host of other projects.
A $285 million construction package like Alvin’s, the third such proposal in six years, isn’t that uncommon in Texas, where many districts that call themselves “fast growing” have cast off the bonds of fiscal restraint.
In Southern California or Ohio, say, a $50 million school bond measure would be considered large. Alvin’s is hardly newsworthy in a region where another suburban school district got a $1.2 billion package approved last year.
School boards across Texas are responding to a simple incentive: the state’s Permanent School Fund Guarantee Program to repay bondholders in the event of a local default.
The guarantee means cheap money for school districts, few of whom have resisted the temptation to splurge on everything from classrooms to career centers to swimming complexes and football stadiums.
That impatience has a cost. Statewide, school districts owe $43.6 billion just for the interest due on school bonds, as of August 2014, according to data from the state Bond Review Board.
Of the 10 largest states, Texas ranks second in local government debt, with $8,627 owed per person. Over the last decade, local school debt in Texas has increased 78.2 percent, from $38.13 billion to $67.96 billion, according to the state’s Bond Review Board.
State law checks the excesses of local school officials by limiting the amount of property tax they may collect for repaying interest to 50 cents on every $100 of valuation.
Just eight years ago, no district in the state hit its property tax cap. Today, 40 have hit or exceeded it. At least 153 are collecting a rate of 40 cents or more. A decade ago, it was just a handful.
These districts have formed a Fast Growth School Coalition with its own lobby to have property tax caps eliminated altogether. In the last legislative session questions were raised when it was learned the coalition was represented by the daughter of Rep. Jimmie Don Aycock, chairman of the House Public Education Committee.
The statewide average in school debt per student is $12,806, according to the state Comptroller, a figure not that far off from the debt created by the famously mismanaged Los Angeles Unified School District, which is just over $17,000 per student.
In Alvin, if the new bond measure passes, local school debt will double that mark, with $35,492 per student.
At the Aug. 18 school board meeting where officials approved the bond package, not one of the board members raised a question about how much the schools cost. The only question was whether voters in a rural district with a 7,000-seat football stadium were prepared to swallow a $41.5 million bill for a new 10,000-seat stadium.
“It’s not an extra, it’s not a boondoggle,” board member Vivian Scheibel said. “It’s something that every part of our community is going to benefit from.”
“When we have the big games, when we have Alvin and Memorial playing each other,” board member Tiffany Wennerstrom said, “when we have graduation, the stadium we have can’t hold all the people.”
The bond package was ostensibly approved by a citizens advisory group misled by district staff, who estimated high school construction at $120-131 million. Only one high school in the state – Tompkins High in Katy – ever cost more than $100 million to build.
The bond package calls for construction of a new junior high school for $42.3 million, a new state record, according to a Comptroller database going back to 2007 and adjusted to 2013 dollars. The next most expensive junior high is more than twice as big.
The four new 800-student elementary school campuses, costing between $24.5 million to $31.2 million, would rank behind only the $36 million for an elementary school in Orange, just east of Beaumont, with double the capacity of any of the Alvin schools.
The only district that’s even comparable, North East ISD in San Antonio, has built four 1,000-student elementary schools over the last few years at a cost of $23.8 to $28.1 million each.
Over the last five years, Alvin ISD’s student population has grown at an average of 4.3 percent per year, thanks to new development along Texas 288, in the northwest corner of the district. But unless the school district’s population simply explodes, its debt will soon be unaffordable.
If its population were to stay the same, Alvin ISD’s rate would hit 56.2 cents per $100 once its repayment schedule ramps up, according to the district’s paperwork from its last bond issue. If the new bond passes, that rate would shoot up past 85 cents.
That’s legal, however, because the district is projecting rapid and continual population growth. They’re projecting a rate of 46 cents for interest payments. (Like the other counties in the Houston area, Alvin’s Brazoria County already has some of the highest property taxes in the country.)
Houston’s been booming over the last decade, thanks mainly to energy, and that’s been driving major housing growth throughout the region, such as a planned 5,000-unit housing development in the Alvin ISD called Meridiana.
According to the district’s demographic research, you can find the fastest-growing school districts around Houston simply by following each of its freeways out to the suburbs. Katy, for example, had more than 3500 new homes sold last year, while Fort Bend County had more than 3100.
Alvin’s growth puts it in either tenth or eleventh on the list for homes sold, homes started, and vacant developed lots. And yet the district projects it will be the third-biggest grower over the long term based on an analysis of how many homes might one day fit in its empty fields.
“These are purely projections,” Superintendent Buck Gilcrease told a school board meeting in August. “Growth could slow down. Growth could explode even more than it is.”
On paper, Alvin ISD is flush with cash, with $266.5 million sitting in investment accounts, three-quarters of it from its$252.5 million bond issue in 2013, according to its most recent financial statements. There is a fund balance of $77 million, thanks to an increase in state aid from $85 million in 2013 to $122.8 million last year.
Between the two cash flows, there was plenty of money for raises and new hires. Teacher pay increased 21 percent in one year.
Now, the district is back before taxpayers, asking to bring property taxes up close to the limit. And no one in the district is telling the voters to say no.
“Obviously,” Alvin school board member Regan Metoyer said, “everything is very much necessary.”
Contact Jon Cassidy at @jpcassidy000 or firstname.lastname@example.org.
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