Published: April 30, 2008 12:08 pm            

Malakoff ISD Bond Election

Dear Editor

Dr. John Spies, Superintendent of Malakoff ISD, was kind enough to spend some time with me today after I had twice questioned the impact on taxpayers that the May 10 bond election could have. I felt I needed clarification of what the net cost would be to the district if these bonds were issued since informational briefings by Dr. Spies had left somewhat of a void in my mind regarding which way to vote.

Dr. Spies shared with me a lengthy, mind-boggling history of how the State of Texas determines how much of its tax collections a property rich district such as Malakoff can keep, and how much goes to the state for distribution to property poor districts in an effort to spread education dollars evenly across the state. This bond issuance results in $0.05 of tax rate moving from the operating side of the budget to the bond fund side of the budget, and therefore is excluded from calculations which result in funds being transferred to the state. This can and will change over time as our tax rate, appraised value of all district property, number of students, and state rules change. These variables lend uncertainty to future financial results, however if we assume the current situation and look at a projection prepared by Southwest Securities, the advisor for the transaction, the funds that will remain in the district rather than be sent to state is adequate to both pay bond interest and retire the series of bonds maturing in a ladder over the next ten years. Calculating the retention of the funds is a complicated process and I admit to a leap of faith on my part due to the complexity, however, Southwest Securities concurrence adds creditability to the transaction. I know Southwest Securities to be highly competent and reputable in municipal bond issuance. The debt service and issuance ladder has been structured according to the future tax rate assumptions, and therefore is heavier in maturity when projections permit. Southwest assumed a 4.50% interest expense which is conservative (3.80% seems more reasonable) and a growth rate of 5.00% annually in the appraised value of taxable district real estate, which also seems reasonable given re-appraisals that periodically occur and additions to the tax base.

To me, this bond issuance makes sense. Although I do not personally agree with all the proposed expenditures and have a preference toward adding learning aids rather than tennis courts or football bleachers, this program should pay for itself (without increased taxation) at the expense of property poor districts across the state. We will undoubtedly have increases in taxes periodically, but I do not envision this bond issuance being a cause of those increases. If there is a reason to doubt the bond issuance, it is because the disclosure of facts and financial rationale has been inadequate for the taxpayers to thoroughly understand the program. My thanks to Dr. Spies for this clarification. If anyone would like to see the Southwest Securities analysis, I can be reached on my cell phone, 903-340-4644.

Jim Taylor

Tool Taxpayer

        

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