The committee met to consider interim charges and other issues related to public education.  The following report focuses only on discussion of the following agenda item:
 
Review facility demand issues on school districts across the state, examining state and local efforts to fund facilities, current regulatory/statutory guidance and best practice models for cost efficiency in school facility design/build.
 
 
Lisa Dawn-Fisher, Texas Education Agency

  • Instructional facilities allotment program (IFA)
    • To assist school districts in repaying debt issued for construction of instructional facilities
    • Yields are based on average daily attendance; guaranteed yield is $35 per pupil per penny of tax increase
  • Existing debt allotment program (EDA)
    • To assist school districts with repayment of bonds issued prior to the IFA program
    • To be eligible a district must start making payments on their own and they become eligible after about two years from issuance of the bonds
    • Designed to provide local property tax relief
  • New instructional facilities allotment (NIFA)
    • Provides funding to assist school districts with equipping and furnishing new buildings
    • Can provide up to $26 million per year to school districts
    • Targeted to fast growth districts
  • Sen. Eddie Lucio asked if the legislature restores funding into the IFA how would TEA use the funds
    • The last time new IFA funding was appropriated all of the applicants on the list were funded; it would continue being administered in the same way
  • Lucio asked if $75 million would satisfy the needs of a majority of applicants; the legislature should make an effort to address more of the needs than $75 million would satisfy
    • If there was interest in adding additional funds, the most impact would be made by changing the yield
  • Sen. Donna Campbell made the point that nothing was taken away from the IFA so “restoring funds” is not the correct phrasing
  • Campbell asked about the new instructional facilities allotment; does it have to be a completely new school
    • Yes, must be a new campus
  • Campbell asked if that funding could be used for new buildings on existing campuses
    • The IFA program allows buildings to be added onto existing campuses

 
James Schiele, Fast Growth School Coalition

  • CFO of Eagle Mt.-Saginaw ISD
  • As fast growth districts grow, many students come in and there is very little increase in taxable assets for the district
  • Districts reach the limit on tax rates while populations continue to increase
  • Have not qualified for IFA or EDA for the last seven years until last year when $75,000 was awarded
  • Struggling to provide facilities for increasing student populations

 
Tom Canby, Texas Association of School Business Officials

  • Anticipated enrollment growth, for the most part, drives facility construction and planning
  • On average, existing school facilities are more than 30 years old
  • There are requirements from the legislature, the federal government and the Texas Education Agency regarding facility standards that districts must comply with
  • The primary mechanism for funding schools is voter approved bond; 87.5% funding by local taxpayers; this number is up quite a bit from previous years
  • The ratio of long term debt to taxable value has increased to 4% in 2013
  • With populations expected to increase significantly over the coming years there will be a major need for new facilities and renovated existing facilities

 
Jerry Gallagher, Builder

  • School costs are climbing fast due to laborers becoming less available; they are working in the oil industry now
  • Districts are constantly trying to build better campuses than in neighboring districts which also drives up costs
  • Cities are expecting school districts to be responsible for land development, road construction, water line extensions, etc. because they are being built on the outskirts of town where growth is expected; this also drives the cost of school bonds up

 
Peggy Venable, Americans for Prosperity

  • 10% of the nation’s K-12 students go to school in Texas
  • Texas has $328 billion in local government debt; the highest of any state
  • 854 Texas school districts have outstanding debt
  • School districts whose debt grows the most are not fast growth districts
  • School district debt is growing faster than enrollment growth and population growth
  • Debt service spending is growing faster than any other school district spending
  • Before building new facilities parents should be asked if they would like to have their students attend other schools aside from public schools
  • Taxpayers need to know more about how much debt they currently have and how much new bond initiatives will cost them

 
Q & A

  • Sen. Kel Seliger asked how much money is in IFA and EDA in the current budget
    • Fisher: Something just shy of $700 million
  • Seliger asked if it would be feasible to make a one-time increase instead of continuing to make those appropriations
    • Fisher: You could do a one-time yield increase for a biennium but new awards would likely not be able to be made with a one-time appropriation
  • Seliger asked to what degree increasing facility costs are a function of increasing security costs
    • Gallagher: Security costs grow very quickly especially when equipping existing facilities
  • Sen. Royce West asked where leadership from the state is needed
    • Schiele: Need leadership regarding the 50 cent test as well as leadership regarding increasing funding to the the IFA and the NIFA; would like to be able to exceed the 50 cent test in certain situations
  • Lucio noted there are at least 1,000 babies being born per month in each Senate district which means in 5 or 6 years those districts will need a new elementary school each month; it is important to think of creative solutions to address infrastructure needs
  • Sen. Sylvia Garcia asked for a recommendation for the yield change to the IFA
    • Fisher: It depends on how much the legislature wants to appropriate and whether their goal is short or long term
  • Garcia asked if more districts would apply for IFA because of additional funds being appropriated
    • Fisher: Most likely
  • Sen. Jose Rodriguez asked why districts ask for more money for facilities when there is currently money in the IFA account and when $75 million could fund all applicant districts
    • Fisher: The concern from districts is generally about the yield not the amount of money in that account; the yield has been flat since the late 90s
  • Chairman Dan Patrick asked about a school district being at the 50 cent rate but not actually being at that rate
    • Schiele: Have been able to delay putting in some new facilities so have been able to lower projected debt payments; in the real world, money is having to be moved to keep the rate lower
  • Patrick asked if TEA looks at how dollars are being spent by districts when money is awarded out of programs
    • Fisher: Statutorily TEA can only look at how they are spending IFA money when making those awards; not looking at efficiency
  • Patrick asked if the state should develop a type of standardized building format for elementary, middle schools, high schools, etc.
    • Gallagher: That would be helpful but taxpayers should get some choice
  • Seliger asked about Eagle Mt.-Saginaw debt growth and enrollment growth
    • Schiele: In the last seven years the district has built nine new campuses and renovated another 10 campuses as well as built a career and tech campus so debt has grown more than enrollment
  • Campbell asked about how much is spent on aesthetics at new campuses
    • Canby: Not sure
  • Campbell asked if charters can receive IFA money
    • Fisher: They cannot receive IFA but they can receive NIFA

 
Public Comment
 
Ray Freeman, Equity Center

  • In the recent school finance court case a big issue was facility funding adequacy
  • When EDA started the state funded portion  would have covered around 90% of the state’s students; now it would only cover around 50%; leaving it at $35 yield has had a negative affect

 
Collin Sandefer, Schneider Electric

  • Helping make operational efficiencies with school districts around the state
  • Attempting to help school districts with efficiency in their M&O budgets
  • Mostly help to save them on energy costs

Attachments