Bond Initiative 1996
Reviewing the KISD bond process over the eleven years of the Merrell Administration clarifies the intent, purposes, and practices that position Katy ISD as one of Texas’ highest taxed school districts.
Groundwork for reaching such a limit was set long before Dr. Merrell arrived on the scene, but Leonard Merrell and others in the state saw the potential for plucking this juicy plum called KATY ISD, and Dr. Merrell‘s candidacy for superintendent was the first step. Katy ISD was set up to be a beta site for all sorts of projects, not the least of which was building facilities which enhanced the curriculum. The educational change agents viewed KISD as a moderately wealthy school district where parents were prone to want things that “looked” good and where parents trusted the schools to do right by their children.
As a member of the Katy ISD School Board in 1995, I rejected Dr. Merrell’s candidacy for superintendent and was the lone nay vote against his hiring. Public notice of my objection was negligible. Dr. Merrell swept into Katy and made it his own within months. I watched as long as I could stand it and then resigned my position a year before my term ended. My disappointment was mostly with the majority of the Board who danced like puppets to the superintendent’s tune.
My instincts told me that Dr. Merrell was a man who had great ambition and who saw Katy ISD as a place where he could try out the School to Work agenda that was sweeping America. Many outsiders helped him to secure the position. My fellow board members were completely snowed by his charm and fell in line like water headed for a low spot.
The school district in 1994 found itself in an awkward position. The superintendent at the time was responsible for allowing the printing of some untoward comments in the Discipline Management Plan which were offensive to all of us. That superintendent was soon on his way out, and the district named an interim superintendent and began to search for a replacement.
Even though Dr. Merrell had lackluster credentials, the Board members took a shine to his affable nature, and all those red flags for me were ignored by the others.
By August 29, 1996, just two years and four months after the voters had approved a $90 Million bond initiative that was touted as being designed to last through 1999, the superintendent was back three years early asking the taxpayers for more money.
It seems “someone” went through the $90 Million rather fast, and guess what? Three of the elementary schools that were promised to the taxpayers when they were asked to vote for the bond issue in 1994, hadn’t been built yet! In fact, press reports seemed to have conveniently omitted that three great big buildings were somehow missing.
“Katy ISD Bond Issue Goes to Vote” by Terry Kliewer of the Houston Chronicle stated, “The last proposal, for $90 million to add two junior highs and renovate two older high schools, was approved by a 2 to 1 margin in another “average” turnout in April 1994.”
The actual vote was 1,837 FOR, to 1,027 AGAINST. The vote was “two to one” because voters expected to get FOUR elementary and TWO junior highs for their contribution of hard earned tax dollars!
The School Board was presented on March 22, 1996 scenarios for bond authorizations. Scenario I ($110,000,000) included two elementary schools (one of which was one of the ones supposed to be covered by the 1994 bond), two junior highs, a high school (Cinco Ranch), Phase II of the Katy High School renovation, Mayde Creek High School Total Renovation and Expansion, Central Support Facilities, land purchases, technology, and bond costs. Scenario II ($83,792,000) included all of those things minus Elementary XIX and Junior High VIII lesser amounts for central support facilities, land purchases, technology, and bond costs, but added $270,000 for portable buildings. Scenario 3 ($104,566,000) funded everything but the high school and doubled the amount for portable buildings. Scenario 4 ($78,088,000) cut out an elementary school, a junior high and the high school. Scenarios 3 and 4 doubled the amount for Katy High School Phase II.
Interestingly when all was said and done, the Bond Committee presented a $130 Million dollar bond initiative. The extra amount appears to have been needed to cover up the failure of the district to build the three elementary schools that were supposed to have been built by the previous 1994 bond.
The Board “set an early election date to avoid interference from presidential politics and the following holiday season.” Surely no one believes that is the reason they didn’t want to have a lot of Republican voters voting on their bond in a presidential election! None of us are dumb enough to believe that.
So the election date was set for October 12, 1996.
Items to be included:
New Construction $70,500,000
Two elementary schools [actually there were more than two, but they didn’t mention the ones that they hadn’t built yet because they used up all the $90 Million in the 1994 Bond]
Two junior highs
One high school (Cinco Ranch High School) - originally estimated to cost $37 million!
Renovations and Expansion $17,600,000
Katy High School Phase II
Mayde Creek High School
Additional expansion $8Million
Support facilities for Food Services, Print Shop, Security, Technical Services, Maintenance and Transportation facilities
Furniture $12.3 Million for furniture and equipment necessary to equip the new buildings and expanded areas
Technology $12.5 Million to acquire the classroom hardware, software and networking adopted by the Board of Trustees as part of the Technology Plan
Land $3Million for land purchases necessary for proposed schools and utility and drainage improvements on Katy ISD sites
Architectural Fees $5.6 million for design consultants as required for new construction and renovation
Bond Costs $500,000
In a Katy ISD press release printed in the Katy Times this additional information was released: “With the residential and commercial building boom within Katy ISD, demographic studies predict a continuous growth in the student population. The school district student population is increasing by more than 1,200 students each year and current enrollment is around 27,000.
Present school district facilities operate at near-capacity with 120 classrooms housed in portable buildings. Without new bond money, the district would be hard-pressed to expand current facilities or build new schools without hitting the state-mandated tax rate cap.”
Stephanie Johnson, a This Week Correspondent for the Houston Chronicle wrote: “ KISD spokesman Charles Rogers said the Bond Steering Committee met for the last time on Sept. 5, and had additional meetings with parents, parent groups, community groups and civic organizations."
On September 20, Rogers finished the last of 30 meetings with KISD staff.
These efforts are part of KISD’s overall campaign to convince voters of the urgent need to build more facilities to house Katy’s rapidly growing student population.
KISD Superintendent Leonard Merrell said the bond issue is pretty straightforward. “As we speak right now, we’ve seen 1,350 students more this year than last year,” he said. “By (year) 2004, we will have 34,000 to 35,000 kids in the district. We need to have a place for them. The (proposed fourth) high school is a big part of why we’re doing this right now.”
There are currently 26,5000 students enrolled in Katy schools.
Merrell stressed KISD will not sell bonds authorized by the Oct. 12 election unless the district actually needs them.
Mike Griffin, KISD’s executive director of Ancillary Service, said only 2,864 or less than 7 per cent of Katy’s 42,376 registered voters cast ballots in the district’s 1994 bond election. “Turnout for a bond election is hard to predict,” he said. “Historically, those areas that benefit most from a bond referendum tend to turn out to vote. Since almost every area of the district will benefit directly or indirectly from this bond election, every voter should want to exercise their right to vote.” Griffin said he is unaware of any organized effort to defeat the bond election.
Homeowners’ school taxes will be affected slightly by this bond referendum. Currently, the debt service tax rate is .38 cents per $100 assessed property value. It is expected to rise to a maximum of 44 cents in 2003-2004. For example, a taxpayer will be paying $57 more in debt service taxes on a $100,000 home in 2003-2004 than in 1996-1997. However the Bond Election Steering Committee reported in August that taxpayers will notice little difference whether the bond referendum passes or fails.
The Bond Initiative passed 2,367 FOR to 1,080 AGAINST.
Interestingly on October 19, 1996, Stephanie Johnson reported in the This Week section of the Houston Chronicle that the “voters approved $110 Million in bonds.” I’m not sure what happened to the $20 Million that appears to be missing from the approval!
In a Q & A in the Katy Times written on September 22, 1996 some interesting statements are made by the school district:
20. How much does it cost to build an elementary school, a junior high or a high school?
Answer: Elementary XVI (McRoberts) was bid May 1996 for $5,929,218 or $59.29 per square foot [but wound up costing $7,772,213]. Beck Junior High was bid in January 1995 for $8,457,595 or $66.22 per square foot. [Beck JH eventually cost $12,322,799] The anticipated budget for High School IV is $77 per square foot.
12. Will Katy ISD be able to sell its bonds at a favorable rate?
Katy ISD’s bonds should receive the highest possible rating due primarily to the guarantee by the Texas Permanent School Fund. Because of this guarantee and the current low interest rates, the District expects a favorable market for its bonds. [Katy ISD Bonds are backed by the full faith and credit of the State of Texas. That's why they are so "favorable."]
23. What did the $90 million bond issue passed in 1994 pay for?
Here’s how the $90 million from the last bond issue was and is being spent:
New construction: Beck Junior High, Katy Junior High, Hayes Elementary, Elementary XVI (McRoberts), Elementary XVII (Alexander). [Please note that McRoberts was actually opened in 1997 and Alexander opened in 1998 contrary to what is stated here.]
Major renovations and/or expansions: Memorial Parkway Elementary, Katy Elementary, Mayde Creek Junior High, West Memorial Parkway Junior High, Taylor High School, Katy High School.
Land acquisitions: Green Trails -10 acres, Fry Road and Misty Cove - 12 acres, Mayde Creek complex - 13 acres; Grand Parkway and Cinco Ranch Blvd. 162 acres.
Technology Acquired -classroom hardware, software and networking adopted by the Board of Trustees as part of the Technology Plan.
The school district began using the bond funds immediately and paid for the elementary schools that hadn’t been built (XVII) (McRoberts) and Elementary XVIII (Alexander) with the 1994 bond funds.
The $130 Million in bonds were supposed to last through 2004 according to statements made by the district. [Rosy scenarios of the future are always a part of the school district's bond proposals--the "taxes won't go up, things will be built on time, the designs are perfect, the need is accurate." and somehow none of those things ever pan out quite the way it's pictured when they are trying to get people to vote for a bond!]
{Article from the THIS WEEK section of the Houston Chronicle )
KISD TO USE BONDS FOR CONSTRUCTION
BY Stephanie Johnson
Bonds worth $28 million will be used to pay for some construction this year after action taken by the Katy Independent School District trustees on Sept. 4.
The board adopted a bond order authorizing the sale of $28 million worth of KISD school District Limited Tax School building Bonds, which were approved by the voters in 1994.
KISD Chief Financial Officer Bill Moore told school board members funds raised by the sale will be used to pay for an estimated $23 million in construction budgeted for this school year.
The remaining $5 million will be placed in KISD’s fund balance. Mel Schonhorst, a financial officer with First Southwest, the company KISD used to help sell its bonds, said the district probably will sell the remaining $5 million of $90 million in bonds --approved for sale by voters in 1994 --sometime in 1997. Seven firms submitted bids to purchase KISD’s securities. The lowest bidder was Everen Securities. Schonhorst said the average interest rate for a long-term bond sale is 6 percent. KISD’s interest rate will be 5.79 percent. Because KISD will not spend all of the $28 million immediately, the district is expected to earn $22,000 in interest on the portion of the funds left in the bank. The $28 million sale will be used to finance renovations at Katy and Taylor high schools, among other projects. “Overall, it’s a very favorable package,” Schonhorst said.
Schonhorst said the next time KISD decides to sell bonds, trustees should arrange face-to-face meetings with ratings agencies so they can explain the difficulties rapidly growing school districts face with a state-mandated $2 per $100 assessed valuation tax cap. “They view KISD favorably” but need more information about the district’s financial predicament, he said.
[Clearly, the Board's financial consultant was suggesting that the Board, once again, take a trip to New York on taxpayer dollars to "consult" with the bond ratings agencies. The Board had taken this trip the year before I got on the Board, and I severely chastised them for this waste of tax dollars. They didn't try it again until I was off the board. Here's what I said to them at a board meeting after I heard about this suggestion:
Members of the Board, Dr. Merrell,
From reading accounts of advice from your financial advisor, it appears that all of you may be getting ready to take a trip to New York City at the taxpayer's expense. There have been several reasons given in different accounts concerning the necessity of this visit.
As a board member for five years who objected many times to superfluous trips by board members and administrators, I must also object to this proposed venture. For five years while I was the only apparent watchdog of tax payer funds, this trip, which was last taken the year before I was elected, was never suggested by any of our financial advisors. We passed a 90 million dollar bond issue, we sold bonds, we refinanced bonds and did all the other necessary things to keep this district on a sound financial course. At no time did anyone find it necessary to send us to New York in order to keep or increase our high credit rating.
Now, by the financial advisor who sent the board and their spouses to New York in 1990, you are again being tempted with this vacation for each of you at taxpayer expense. It is not necessary for you to make this trip, and you know it! Mr. Schonhurst should meet with S&P and Moody's at his own expense. Heaven knows he is paid handsomely and should include that effort in his fee.
The excuse that these folks in New York City need to see each of you in the flesh in order to raise the rating is outrageous. Some of you may not even be around in a few months. This rating is not based upon YOU or YOUR financial standing. This school district is not a corporation that produces material goods for which you can claim credit. It is a government, and the credit rating is based upon the report that Bill Moore is quite capable of producing and the full faith and credit of the State of Texas.
Please think twice about this frivolous jaunt and how that tax money could be better spent buying instructional supplies for teachers and students. Your fiduciary responsibilities do not include boondoggle trips. [And I got a huge round of applause from the audience.]
Trustees also discussed the district’s 1996-1997 tax rate, which is scheduled for adoption at a Tuesday, September 17 board work/study session. Trustees did not commit to any particular tax rate at their September 4 work/study session and may even decide not to raise the rate, said Vice President James Peters after the meeting. “What we really talked about last night was raising the debt-service tax rate from 36 to 38 cents,” he said. The debt-service rate is the interest on the bonds sold over the years. KISD’s current tax rate is $1.73. The district’s 1996-1997 budget is predicated on a $1.37 M&O rate and a 38 cent debt service tax rate. The current debt service rate is 36 cents.
The following is a copy of an editorial in the Katy Times (by Ken Steger). I appreciate that Mr. Steger questioned the school district’s inability to be forthcoming about what they intended to do with the money from the bond.
Bond Proposal Raises Questions
The proposed $90,000 bond issue which voters in the Katy Independent School District will soon be asked to approve is a sound investment in the future education of our students. Reasonable population projections indicate accelerated growth in the Katy area--growth that will greatly affect our classrooms. If preparations are not made now to handle the future number of students attending KISD schools, the district will be faced with a crisis situation in terms of physical accommodations.
Some of our schools are already bulging at the seams, relying once again on temporary, portable buildings for classrooms -- and only a year after expansion of several elementary schools and the construction of a new junior high. The need to address this imminent growth is a wise move on the part of the administration and the school board. And it seems that going the bond route is the best way to finance the expansion, lessening the financial burden to the individual taxpayer over a longer period of time. Hopefully, an expanding tax base (which should result if the growth projections are accurate) will ensure that new residents who come into the area during the next few years will share in the expense for the building program.
The alternate pay-as-you--go program, which has been suggested by some, would saddle current residents with the full tab for future KISD expansion and, more importantly, would probably fail to keep pace with needs of the district.
So, all in all, the bond proposal is a good move.
However, with all that said, the manner in which the bond plan has been presented to the public leaves a lot to be desired. The administration, apparently with the cooperation from the board, has presented a plan to the public that addresses future expansion commitments mostly in generalities. Under the auspices of, “not tying the hands of future boards to changing conditions,” residents are being asked to vote themselves an additional $90 million in tax burden without the benefit of having the funds specifically earmarked in advance.
That’s a lot of trust.
Also, the district has discouraged discussion of a broader view of KISD’s future plans for fear the bond proposal would become tied to “an emotional issue,” which could lead to its defeat. But these so-called emotional issues, such as changing attendance zones or converting to year-round schools, should be imperative to any future expansion plans.
District patrons would have been better served had these topics been openly presented as part of the bond package.
But, in the end, votes will have the final say on April 9.”
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An interesting fact is that the 37 million dollar Cinco Ranch High School, (which eventually cost way more than that) was built by the same architect (PBK) that built a similar sized high school in Ft Bend (Austin High School) two years prior for 20 million. Now tell me there wasn't something going on and that it wasn't very wrong!