FREQUENTLY ASKED QUESTIONS
What is a bond issue and why do we have elections?
Homeowners borrow money in the form of a mortgage to finance the purchase of a home. A school district borrows money in the form of bonds to finance new schools or classroom additions and major renovations and upgrades. Both are repaid over time, but in order for a school district to sell bonds, it must go to the voters for approval. By law, bond funds cannot be used to fund daily operating expenses or salaries. Bond funds can only be used for school construction, renovation and other capital needs projects like technology or security equipment.
Who decided on the amount of the bond proposal and what measures have been taken to make sure that critical needs have been identified?
In the fall of 2016, under the direction of the School Board, AISD staff undertook a comprehensive study of the district’s 55 campuses. Aging facilities was a focus of the study since nearly 80 percent of our schools are more than 50 years old. The Board met in several special meetings over the spring and summer, paring down the list to projects originally estimated at more than $300 million. They also appointed a Citizen’s Facilities/Bond Committee to further study campus conditions and make recommendations to district staff. In August, the Board called for a $100 million bond election to be held on November 7, 2017.
Why can’t the district pay for these needs out of its operating funds?
If the district were try to add classrooms and take care of significant restoration and infrastructure needs on a “pay as you go” basis from its day-to-day maintenance and operations budget, rather than financing school construction with bonds over 20 or 30 years, there would have to be a huge and immediate increase in property taxes, instead of over the life of the bonds. That said, over the last decade, the Board has worked to address facility upgrades and renovations by spending and committing more than $57 million from the District’s general fund for projects including the addition of 55 classrooms and science labs, and many other items for the general upkeep of facilities like water and sewer line replacements, door replacements, lighting retrofits, and parking lot repairs.
Why couldn’t AISD use its reserve fund, or savings, for the bond projects?
The fund balance sits at $70 million after current commitments, which is only about $7 million more than the minimum required to maintain what the board views to be a fiscally responsible number of days of operating expenses. The remaining amount is not enough to address the facilities plan envisioned for the bond program. However, the Board has committed approximately $35 million from fund balance to pay for projects like the replacement of 320 aging HVAC units, a major technology equipment refresh, and future construction and capital facility projects.
What will be the tax rate impact of the issuance of $100 million in bonds?
If the bond election passes, 5 cents will be added to the portion of the tax rate that is used to pay off long-term debt. AISD’s current tax rate of $1.189 is composed of two parts - $1.08 for maintenance and operations, and $.109 for debt service. If the bond election passes, the total tax rate would increase to $1.239 per $100 property valuation, effective beginning with the 2018 tax statements. If the bond passes, the average home in Amarillo ISD, valued at $121,000, would see an estimated tax increase of $4 a month or $48.02 a year, based on current market estimates.
Will property taxes for senior citizens be affected?
No. Those who are 65 or older (as of January 1, 2018) qualify for a $10,000 homestead exemption in addition to the $25,000 exemption for all homeowners. Once you apply for and receive the over-65 exemption, a maximum school tax amount is applied to your home. Your school taxes cannot increase above this ceiling as long as you own and live in your house, unless you add on or complete a major renovation that increases the value of your home.
What interest rate will be paid on the bonds?
The bonds will have varying maturity dates ranging from one year to 25 years. We are projecting that the rates will average 4.25%. Amarillo ISD has an AA+ bond rating and, since the bonds will be guaranteed by the Permanent School Fund Guarantee Program of the State of Texas, they will receive an AAA rating.