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Bond Facts 2018

What’s a bond and why do I have to vote on it?

When consumers borrow money for a house, they apply for a mortgage. When a school district wants to build a school or buy expensive equipment, it sells bonds to investors. The money from those investors acts as a loan to the school district, allowing it to make big ticket purchases. Just like many consumers, a school district would need to borrow money for a building or remodeling project, to upgrade expensive technology, to buy vehicles or to purchase land.

Texas school districts can issue bonds only with voter approval and only for the amount approved by voters. The district is not required to spend all the money approved by voters, but it also can’t borrow more, even if a construction project were to run over budget.

How are bonds paid back?

Debt payments come from a small portion of your local property taxes. Each year, the Round Rock ISD Board of Trustees sets a tax rate that has two parts. The larger part is the Maintenance and Operations (M&O) portion. It pays for salaries, utilities, supplies, and routine maintenance for buses and buildings. The smaller portion is the Interest and Sinking (I&S) fund, and it cannot be used for day-to-day expenses such as salaries, only debt.

In Round Rock, the overall tax rate is $1.30 per $100 of property valuation. Of that, the M&O rate is $1.04, and this rate can’t be raised without voter approval. The I&S rate is .2648, one of the lowest rates of surrounding school districts and the lowest rate in RRISD in 30 years. This rate can be raised to pay for new debt or lowered as debt is paid off.

Will the bond increase my tax rate?

The bond is not expected to increase your tax rate if it is approved. Because Round Rock ISD has been paying down bond debt, it can add new debt without significant increases in its annual debt payment. Plus, as the region grows, the tax base also grows, which gives the District more I&S money to pay District debt.

How is it possible to borrow $500 million and NOT raise tax the tax rate?

Think of your household budget—the best time to buy something new is after you’ve paid off something else. Imagine you took out a loan to buy car for $300 per month. That $300 car payment becomes a fixed expense in your monthly budget, with your mortgage or rent payment. When your car loan is paid off, you have $300 available to replace your car, pay off other debt, or invest in braces for your kids, without changing your total monthly expenses. Round Rock ISD is like you—it has paid off enough of its annual debt to absorb new debt.

Another reason the bond isn’t expected to raise the tax rate is because the District won’t borrow all the money immediately. Bond sales will happen in three phases. This spreads out borrowing, and it allows time for projects to be planned and implemented. New schools require planning before construction starts; major renovations might have to be done in the summer only; and for some projects, such as replacing playground equipment and HVAC systems across the District, there simply isn’t the labor even if the District wanted to spend all the money immediately.

Who is setting this high value for my house and property?

Property taxes are determined by property values and tax rate. If you are like most everyone in Central Texas, your property tax appraisal is rising. People and companies love Central Texas and continue to move here—and that popularity is driving up property values. Appraisal values are set by the county central appraisal district, and appraisal values are based on market value.

What information does the District use to project property values will increase? What are the percentages of value growth for each year?

The District uses historical data, input from appraisal districts, reports from Templeton Demographics and chambers of commerce information to project property values. Round Rock ISD does not project too far into the future with percentages of value growth, as changes can occur to a number of external variables. Current projections for the next three years are:
2019-2020: 8%
2020-2021: 5%
2021-2022 : 3%

If more people are moving here, why doesn’t Round Rock ISD have more money for remodeling and growth without a bond?

The M&O budgeting system in Texas is designed so that when property values rise, state funding decreases. You might have heard about the state’s “Robin Hood” or recapture payments—the state uses a complex formula to try to reduce disparities in school district funding across the state. When local property “wealth” grows faster than state-formulated weighted average daily attendance (WADA), the state redistributes that “wealth” to property “poor” school districts. That means districts can’t get the full benefit of rising local property values.

This year, $277 of the average homeowner’s tax bill is expected to be paid to the state as recapture payments. Next year, that portion is expected to rise to $473.

Plus, the District has higher costs. As the growth in the area drives up the tax base, it also brings more students to Round Rock ISD schools. The District is obligated to provide more teachers, supplies, busing and security for more students every year, which increases operating expenses. Meanwhile, the District faces the same cost pressures as area consumers—when the price at the gas pump rises, the District pays more to run its fleet of buses. As wages rise in Central Texas, the District has to pay find and keep qualified staff, from bus drivers to teachers.

Why doesn’t Round Rock ISD save up money for big projects?

Just like in families, it’s impractical to save up for “big ticket” items before buying them, especially when the needs exists now. Buses and portables cost more than $100,000 each—the District can buy one or pay two teachers. To buy 10 buses means the loss of 20 teacher salaries. A new elementary school is expected to cost $50 million and is seen as a critical need now. That’s more than 10 percent of RRISD’s annual operating budget.

In addition, a bond election allows citizens oversight as to where they want to invest in capital improvements. In essence, the community approves a new school or bus purchases through their votes.

If “Robin Hood” means the state is taking a larger share of local property tax dollars, can’t the tax rate go down to equal what RRISD can keep?

This goes back to how the school funding system works in Texas. The state recapture system works to minimize wide differences in funding at local districts. To decide whether a district is “wealthy” or what it can afford, it looks at county-appraised property values. If those values are high but the tax rate is artificially low, a school district would still be obligated to make recapture payments.

Who decided what is needed in the bond?

A group of committed community volunteers worked for thousands of hours to weigh the needs of hundreds of projects and decide which were the most critical. In February, the RRISD Board of Trustees called for a Citizen Bond Committee (CBC), and that group delivered its recommendations in August. The CBC identified more than $800 million in needs and narrowed them down to three potential bond packages. Using those recommendations, the Board of Trustees developed the Bond package on the November election.

How are costs estimated?

To estimate project costs, the District consults with local builders familiar with costs in Central Texas. As construction demand rises in the region, some builders have reported costs topping $300 per square foot. The District also checks into the costs of comparable projects in nearby school districts. Project estimates are total project costs, not just construction costs. The estimate for new schools and classrooms will include finishes, furnishings and generally the technology for that space.

Each project is site-specific and is estimated on its own merits. Factors that could influence costs include historic significance; lead or asbestos abatement; the condition of the underlying infrastructure; varying excavation costs; deconstruction; time of year the project must be completed; timeframe to complete the project; background checks for workers on campuses; and the health, welfare and safety needs of students and staff. Estimators try to anticipate these factors and use a reasonable number that will allow the District to accomplish the project.

Why are costs so high?

Construction is driven by the market. In Central Texas, with its strong economy, rapid growth and low unemployment rate, skilled construction workers are in high demand and get high wages, which increases labor costs. Even delivery labor costs are up across the board. Material costs can go up with high demand, inflation or other market forces. Contractors will bid high enough to be able to hire qualified and reputable subcontractors. In this region, school districts are competing with other districts, home builders, the Texas Department of Transportation, and the commercial industry to find builders who can deliver on their promises.

When was the last bond passed in Round Rock ISD?

Voters passed a Bond package in 2014. Money from that Bond funded the construction of Joe Lee Johnson STEAM Academy, Pearson Ranch Middle School, and extensive work at McNeil High School. A package of three Bonds on the May 2017 ballot failed.

Why are some of the same projects on this Bond as were on the 2017 Bond proposal?

Critical projects don’t go away, and many of the priorities in the 2017 Bond have not been addressed because of the inability to borrow money. The student population has risen faster than expected. Safety concerns have become more urgent because of recent school shootings. Technology continues to age.

What will happen to C.D. Fulkes Middle School in this Bond package?

C.D. Fulkes Middle School is Round Rock ISD’s oldest facility, and it requires extensive upgrades. RRISD wants to rebuild C.D. Fulkes as a traditional middle school while retaining historic value where it can, and the C.D. Fulkes community supports that plan, surveys find. Round Rock ISD wants to build a campus that allows for the best education delivery for the students at C.D. Fulkes and give those students equity with middle school students across the District.

Challenges at the school include small classrooms, narrow halls, decades of organic growth that have led to a dysfunctional layout, aging underlying infrastructure, inadequate flexible gathering spaces and instructional spaces, a small cafeteria, and noisy HVAC systems that can no longer be repaired because the parts are no longer produced.

A new school would be planned in today’s strategic view, which includes flexible and collaborative learning spaces such as a student commons. Flexible spaces allow students to work on team projects and allow schools to adapt to growing populations. Reconstruction would offer better site coverage, parking, building access, security, and zoning of students for daily learning and special activities.

Will students be able to attend C.D. Fulkes Middle School during the rebuilding process?

There are no plans to relocate C.D. Fulkes Middle School students to another campus. The reconstruction would occur in phases, so the school could still operate as a viable campus in the interim.Round Rock ISD would consult with its architects and builders to make a safe and viable plan to keep students on their campus during the reconstruction.

Why does the District want to build a swim practice facility?

Swimming is a popular program at Round Rock high schools, but right now, the options for students are uneven across the District. The District proposes to build an enclosed swim practice facility on the east side of the District that can be used for Cedar Ridge, Stony Point and Round Rock high school students. McNeil and Westwood students swim at the privately owned, indoor Waterloo Swimming, which is leased by the District and conveniently located for those students.

Currently, the Cedar Ridge swim team practices at the outdoor Lake Creek Pool owned by the City of Round Rock, and the Stony Point team practices at a YMCA pool. Round Rock students swim at the outdoor Micki Krebsbach pool owned by the City of Round Rock. These pools have disadvantages for students and coaches, including weather, space, time available and the design of the pools. These pools are designed for community enjoyment. These pools are not the depth or size needed for students to perform at the UIL standards. At the YMCA pool, Stony Point students are sharing already limited space with a growing community. Cedar Ridge must also use the YMCA pool occasionally, in order to practice with starting blocks. That cuts into already limited practice time and space.

Aquatic Practice Facility Overview

What is Round Rock ISD’s vision for a swim practice facility?

Round Rock ISD envisions a “passive” cover with roll-up doors that would minimize heating and cooling costs for the building. The deep-water pool would most likely be 50 meters long, 25 yards wide sectioned into lanes. The building would include changing facilities for boys and girls, restrooms and showers. If the budget allows, the District could add a smaller pool for swim lessons for elementary students or swimming for students with disabilities, or a deeper pool for diving instruction.

Would this practice swim facility be a place for competitions?

The swim facility would have minimal seating and could potentially host two- to three-team meets, but would not be big enough for District or regional competitions. All District high schools would be able to use the facility for small swim meets.