As the Grapevine-Colleyville ISD board of trustees considers a possible bond election in May 2024, the board heard from Chief Financial Officer Derick Sibley at the Sept. 25 meeting about how to best utilize the district’s debt service fund balance.

What happened

Sibley said the debt service fund balance is the excess of prior year debt service tax collections.

“The funds that were above and beyond what was required to service the bond principal and interest payments in any given year, that surplus was put into a fund balance,” Sibley said.

He added the estimated amount is $25 million, but $10 million of that, which is 25% of the maximum bond payment, is the amount that the district’s financial advisers recommend the district have on hand to help pay the first bond payment of the fiscal year. It’s also there to soften any blows due to an economic downturn. Sibley said following that recommendation, the estimated surplus is $15 million.


The details

Sibley said by law, the district has three options when it comes to spending that surplus:
  • Using the funds to prepay the existing bond principal
  • Using the funds to subsidize the tax rate impact on future bond issues
  • Holding funds as cash reserves
“You cannot pay for bond projects; you can’t pay for salaries; [and] you can’t pay for any day-to-day operating costs,” Sibley said.

Sibley said the district has prepaid bonds 10 times since 2008, totaling $73.7 million worth of bond principal, saving district taxpayers $47.1 million worth of interest payments.

Moving forward


To show how a prepayment might impact future bond payments, Sibley gave an example of a potential May 2024 bond election with the following numbers:
  • $35 million in short-term projects
  • $130 million in long-term projects
  • A 25-year bond repayment timeline
  • A 5% interest rate on bonds
  • Property value growth of 6% for three years
“If we were to use all $15 million of our fund balance to prepay bonds, we would end up saving the taxpayers about $1.9 million in future interest payments,” Sibley said.

Sibley’s presentation to the board was for information only, and no action was taken.