On Nov. 7, Katy ISD voters will head to the polls to vote for a $609.2 million bond proposing new schools, facilities upgrades and other improvements. District leaders called the measure necessary to ease overcrowding from KISD’s nearly 16.8 percent growth over the last five years. The district’s bond committee reported enrollment would likely grow about 30 percent to 98,006 students by 2026. “Our projections are that our growth really does not change and slow down,” KISD Chief Operations Officer Lee Crews said. As schools age, enrollment grows and state funding formulas for educational facilities remain unchanged, KISD and school districts across Texas can expect more bond elections to keep up with needs. But a shortage of skilled construction workers in the Greater Houston area, combined with expected changes in school building standards could also increase project costs. Bonds are often the best choice for a school district or municipality when state or federal funding for facilities is insufficient, according to a report by Marialena Rivera, an assistant professor in Texas State University’s College of Education. Texas’s state share of school capital expenditures was about 9 percent between 1992 and 2013, compared to the national average of 18 percent. “[Texas Education Agency] staff also confirmed that educational facilities remain the primary responsibility of local school districts given the strong culture of local control in the state,” Rivera said.

Crafting the bond

The biggest costs in KISD’s 2017 bond package are six proposed new schools for about $414.3 million combined. The schools would be located where school leaders saw significant growth since the 2014 bond measure. “You’re looking at rezoning an entire high school in order to accommodate the growth,” 2017 bond committee Chairman Keith Carmichael said to trustees July 17. “Why not just build one?” The proposed 2017 bond also includes renovations to 54 of 63 existing schools and 16 other facilities for a combined $104.6 million. KISD uses a 10-year, long-range facilities plan to determine which structures need renovations. Crews said the document is updated typically right before a bond election is expected to be called. “Then we also at look the conditions of our current building, and we try to get them updated on a rotation but also as needed,” Crews said. Lisa Kassman, KISD executive director of facilities, planning and construction, said building lifespans vary, but schools usually last for about 30 years. Now, Fielder Elementary School, built in 1993, is up for a nearly $20.9 million full renovation in the 2017 bond package. “Chillers and HVAC work is ongoing all the time,” Crews said. “Safety and security is something that you will see in every single bond, and it affects every campus.” Carmichael and KISD Chief Financial Officer Chris Smith said if the district waits to start this bond's projects, KISD risks inflated construction costs and rezoning to fit students in the meantime. “Yes, you can delay it, but if you delay it, there are consequences to doing that,” Carmichael said.

Construction costs

Bonds have grown in KISD: from $90 million in 1994 to $748.1 million 20 years later. Crews said new schools are usually the biggest costs and reflect growing enrollment. “We’ve averaged almost 2,800 students coming in each year for the last five years,” he said. Public school construction spending has increased nationally since 1994, due to inflation, improved safety standards, stronger accessibility requirements, more technology and expanded programming, according to the 21st Century Schools Fund. In KISD’s 2017 bond package, the proposed high school and two junior high schools are modeled after Paetow High School and Stockdick Junior High School. Their “21st century learning” designs includes elements such as more collaborative spaces and libraries with more room for group work, Kassman said. However, the new high school would have an attached competition-sized natatorium, a unique factor that KISD Superintendent Lance Hindt said would be cheaper than operating a separate building. Between KISD’s bonds in 1999 and 2010, the cost of building a high school increased about 10 percent every three to four years. But Paetow High School was a roughly 50 percent increase, KISD trustee Bill Lacy said when the bond was presented to the board July 17. Smith said that was because the bid for Tompkins High School in 2010 was cheaper at the end of the Great Recession. Tompkins was built when school construction spending decreased nationwide by about 40 percent, according to the 21st Century Schools Fund.

Labor is limited

Construction demand around the Greater Houston area is also driving costs, Crews said. “We’re fighting for the same labor pool as they are,” he said—a labor pool that is shrinking. According to the Associated General Contractors of America, the Houston-The Woodlands-Sugar Land metropolitan statistical area had the most construction 12-month job losses of any U.S. metro area in June. In an August survey, 69 percent of Texas firms said they struggled to fill hourly craft worker positions. "In the short-term, fewer firms will be able to bid on construction projects if they are concerned they will not have enough workers to meet demand,” Associated General Contractors CEO Stephen Sandherr said in a news release.

Why bonds?

Funding new school construction with bonds makes more fiscal sense, experts said, because very few districts have the cash up front for such large projects. Financing new construction with the general fund, which covers regular school operations, is ill-advised since projects are getting pricier, according to Martin Luby, an assistant professor in the LBJ School of Public Affairs at The University of Texas. “It makes sense on intergenerational equity to spread the cost of capital projects over time,” he said. Rivera said equity is lacking in school construction in Texas and nationally because projects are largely tied to local property taxes. Districts that cannot afford to borrow are limited when building new schools. Smith said KISD would not raise its tax rate from $1.5166 per $100 valuation to pay for the 2017 bond. However, passing the bond would extend the time to pay off the KISD’s debt by three years, he said. “In general, states in which local debt is highest are the ones that did not have a state program to help local districts pay for their facilities capital investments,” Rivera said.