The details
By a vote of 6-1, GCISD board members set a new board policy Feb. 26 related to bond issues, such as annual reviews and setting the tax rate associated with the district’s interest and sinking fund.
According to district documents, public school taxes involve two types of funds: maintenance and operations, and interest and sinking. Maintenance and operation funds are used for day-to-day operations, such as:
- Teacher and staff salaries
- Supplies
- Food
- Utilities
Chief Operating Officer Paula Barbaroux said that the policy addresses four issues on an annual basis:
- The balance in the interest and sinking fund
- The district’s debt payment obligations
- The impact of appraised property values
- The board’s setting of the tax rate
District documents state that as part of the new policy, the interest and sinking tax rate will be set each year to a value that will generate only debt service revenue that, when added to a portion of the fund balance, will equal the minimum debt service projected for the current year. The interest and sinking tax rate will be set using the current taxable value for the district as certified by the chief appraiser and as adjusted to reflect changes made by the chief appraiser as of the time the debt service tax rate is adopted.
Barbaroux said that there are also minimum and maximum clauses in the new policy when it comes to the interest and sinking fund balance.
“There’s a minimum that must be retained in [the fund] by policy, which is to make sure that you have your August [debt] payment plus 25% of your current year’s [debt payment] obligation,” Barbaroux said. “If, for some reason, it looks like through your tax revenue and collections that it would be below that, it obligates the board to increase the tax rate accordingly.”
Barbaroux then talked about the maximum component of the policy, which ensures that district officials are not unnecessarily building fund balance in the debt service fund.
“If there is an instance where [the amount] is above the debt payment plus 25% of current [debt payment obligation], then the district is called upon to develop a plan to use the excess amount to either pay off additional principal or subsidize the I&S tax rate,” Barbaroux said.
Barbaroux said that the other major component of the new policy deals with the timing of when school bonds are sold.
According to district documents, the chief financial officer, along with the district’s bond financial adviser, and the district’s bond counsel will evaluate the amount of voter-approved bonds for recommendation to the board of trustees to be sold or issued. This recommended amount shall only be what is necessary to finance bond projects, acquisitions and purchases that are reasonably expected to be concluded within three years of the bond issuance.
“You don’t necessarily sell all bonds the minute a bond package is passed,” Barbaroux said.
What they’re saying
The lone dissenting vote on the new policy came from Place 2 trustee Becky St. John. She voiced her concern that the new policy will negatively affect taxpayers.
“Just like a household credit card, this policy, as written, now locks in the fact that the taxpayers are going to be saddled with the largest amount of payback on the bonds,” St. John said. “The policy as it's written guarantees that the taxpayers will be only making the minimum payment just like a credit card, and I’m not going to saddle the taxpayers or kids with future debt like that.”
Speaking in favor of the policy, Place 5 trustee A.J. Pontillo talked about how this action will keep things more transparent for voters.
“This district got into a habit of every five years passing extremely high bonds, without doing anything other than saying, ‘We’re keeping your tax rate the same,'” Pontillo said. “This [policy] is a lot more transparent. It allows people the opportunity to know what is happening every single moment with their money.”
