Why Austin school board won’t hedge its bet on a $1 billion school bond

2:15 p.m Friday, July 21, 2017 Local
Tamir Kalifa
Gerardo Favela cleans a cement mixer as he and a crew from C.W. Oates Masonry Inc. work on a construction project at Patton Elementary School on Thursday. The additional classrooms were funded from the Austin district’s 2013 bond money.

The Austin school board in November will place before voters a single $1.1 billion bond proposition, a departure from previous bond elections when the district tried to hedge its bets.

Instead of offering one big bond, past Austin school boards in the last 15 years broke their funding requests into several distinct propositions, expecting voters would approve all of them, but figuring the district would get some funding even if one failed.

It worked until 2013, when Austin asked for $892 million, broken into four propositions. Voters rejected half of them — marking the first time in at least 25 years that an Austin school funding measure had failed.

More recently, voters shot down all three propositions in the Round Rock school district’s $572 million bond package.

A single $1.1 billion proposition for property tax-fatigued Austin voters might sound more risky, but political watchers and Texas school officials who have won approval for even larger amounts say it gives the district the best chance at the polls.

School Trustee Amber Elenz put it bluntly: “I think we ask our voters, it’s a one-proposition plan. They either support public schools or they don’t.”

Bob Stein, a Rice University political science professor, says multiple propositions invite voters to shop for the things they like and reject projects they don’t like, or that don’t affect their own households.

“As a general rule, what we’ve seen in past 20-25 years, bonds with multiple items fail,” Stein said. “The dangers of putting several items on is you risk voters choosing one or two at the most. If you put the entire package on, you tend to create greater support. … To get the piece of the pie they want, they are forced to vote for it.”

Breaking the measure into multiple propositions also might appear to give some projects higher priority than others, said Austin school board President Kendall Pace, which “seemed to be more contentious without any gain. … This is important, so we’ll come forth as one.

“It seemed like a futile effort to break it into pieces when they’re all critical needs and must be addressed,” she said.

Calculated risk

Houston and Dallas in recent years have been successful using the tactic to pass more than $1 billion in single-proposition bond packages.

In 2012, Houston voters approved a nearly $1.9 billion single-proposition bond – the largest for a Texas school district — intended to rebuild, renovate and upgrade 38 schools.

Former Houston school Superintendent Terry Grier, who was overseeing the district at the time of that bond passage, said previous referendums were broken into several propositions, with school leaders putting before voters only the amount they thought would pass.

He said he also received pushback from some in the community who said the package needed to be under $1 billion. But he said he wanted to take a hard look at what needed to be done in schools, projects that would last 50 to 75 years, and that voters needed to see the value of good schools in the community. Naysayers, including a few trustees, told him it wouldn’t pass. He also pushed for the single measure.

“We weren’t doing it for voters in one part of the city. The needs were districtwide,” Grier said. “We are a school district, not a district of schools.”

Tax impact is key

Dallas has successfully passed more than $1 billion single-measure bonds twice. In 2008, voters approved a $1.35 billion bond package and in 2015, a $1.6 billion bond for multiple new schools or rebuilt campuses and hundreds of additional classrooms, among other projects.

Like Austin’s plan, Dallas school leaders in their most recent bond election promised no tax rate hike, another key message in convincing voters to go all-in.

“If it had been a tax rate increase, I think we couldn’t have passed it,” said Dallas school Superintendent Michael Hinojosa, who oversaw both bond programs. “In fact, the polling indicated if there was a tax rate increase, it would have gone down. The needs were $5 billion, but all we could afford was $1.6 (billion) so that’s what we did.”

Austin district officials said that for this bond package, they could layer the debt over time in such a way that the tax rate would not increase. But they had little wiggle room to go any higher. Had the district financed all the projects at once, it would have added 10 cents to the tax rate in the years beyond 2020.

But besides keeping their word, nothing legally binds Austin district leaders to maintain the current tax rate during the repayment period. Austin must manage old and new debt to prevent a tax rate increase, but the school board votes on the tax rate every year, and new leadership that comes in isn’t necessarily bound to keep it the same.

Austin’s bond package calls for several new schools; tearing down and rebuilding others; relieving overcrowded areas of the district; addressing critical need deficiencies and relocating the nationally recognized Liberal Arts and Science Academy, or LASA High School, among other projects. The projects for the most part came from work over the last year on a 25-year comprehensive facilities master plan aimed at modernizing the district and all of its campuses. The plan includes hundreds of recommendations, and district officials said the November bond is the first of several they will need to call to address those needs.

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