Improved bond rating saves LISD money in interest

Improved bond rating saves LISD money in interest

Written by Mark Collins Friday, 18 July 2008

Recent Leander ISD bond rating improvements could save the district more than $30 million in interest.

In June, nationally recognized credit rating agency Standard & Poor’s upgraded LISD’s bond rating from A+ to AA, up two levels from last year. A second company, Fitch Ratings, kept the district’s rating stable at A+.

“One of our board members asked our bond adviser if he had ever seen a school district go up two levels, and he said no,” Assistant Superintendent for Business and Operations Ellen Skoviera said.

Since the savings will be in interest, it is difficult to calculate exactly how much the district will save, Skoviera said. The district saves a minimum of $1.6 million per hundredth of a point, and each bond rating level equals roughly ten hundredths of a point. Therefore, LISD will save about $32 million, according to Skoviera.

“We are an intensely fast-growing school district, we have excellent community support for our projects and the people who do the bond rating recognize that we’re a solid, sound, substantial district,” LISD Communications Director Dick Ellis said.

The ratings are based on a series of criteria that include management practices, fund balance policy, planning ability, past bond success and the community’s willingness to fund the bond.

Several of these key factors contributed to LISD’s large jump in bond rating. The community’s request that LISD hold a bond election two years ahead of schedule indicated the district would have no problem funding the bond.

LISD’s board of trustees has had little turnover in recent years, leading to a consistent growth plan, which is very attractive to investors. New superintendent Dr. Bret Champion, who was promoted from within and is familiar with the district, will ensure the plan continues and take it to new heights.

LISD also received praise from the credit rating agencies for its major maintenance program. The program assesses the condition of facilities throughout the district on a yearly basis and sets a schedule for adequate repairs to be made. The unique program helps LISD allocate funds and perform preventive maintenance.

“We are distinguished by the amount of long-term planning we do. We know where we’re going, our estimates are good, we build our buildings on time,” Skoviera said. “They have commended our district a number of times on the conservative practices of the board and the fact that the board does do everything with an eye towards the future.”

How the bond process works

Each year Leander ISD receives demographic reports from Population And Survey Analysts that help the district track growth and balance the budget for future projects. With recent growth, LISD has typically held a bond election every three years. However, when PASA reported in September 2007 that the district would grow by more than 30,000 students in the next 10 years, it was clear that something needed to be done. Community members spoke out on their desire to build new schools ahead of schedule and requested that the district hold a bond election in November 2007. The charts below represent the bonds sold by the district in 2008, both from the 2006 authorization and 2007 authorization.

2007 - Authorization – 2008 sale

• • Land – Funding for the purchase of land for elementary school number 29, middle school number 10 and high school number seven; several locations are being considered: $13,233,756
  • Design – Design of elementary school number 23, finish design for Vandegrift High School and elementary security enhancement projects: $3,940,452
  • Construction: $172,648,789
    • New schools – Construct Ronald Reagan Elementary and Vandegrift High School
    • Furnishings – Necessary equipment, utilities and furniture required to open new schools Grandview Hills Elementary and Vandegrift High School
    • Athletic improvements – Construction of new regional stadium on Vista Ridge Boulevard, renovations to A.C. Bible Stadium and installation of turf practice field at Leander High School
  • Technology – Completion of fiber optic network and upgrade of telecommunication system; implementation of district Instructional Technology Learning Team Plan, which aims to raise the number of computers per classroom from one to four: $18,713,000
  • Major maintenance – Replace heat recovery unit and exhaust fans for heating and cooling systems at support services building and Grandview Elementary: $21,682,000
  • Bus replacement – Replacement of 14 aging buses: $1,145,783
  • Portable replacement – Scheduled upgrades and replacements of 17 portable buildings: $1,020,000
• Total – $232,383,780

2006 - Authorization – 2008 sale

• • Design – Design of middle school number eight and 75 percent of Vandegrift High School: $5,508,423
  • Furnishings – Necessary equipment, utilities and furniture required to open a new school. Funding includes Ronald Reagan Elementary, River Ridge Elementary and middle school number seven: $6,807,657
  • Technology – Infrastructure equipment replacement, new computers and technology for classrooms, replacement of aging computers and network infrastructure: $13,550,000
  • Major maintenance – Expansion of warehouse and support services building; additional space for transportation facility; complete heating, ventilation and air conditioning work at Leander Middle School: $10,761,095
  • Bus replacement plan – Scheduled maintenance and replacement of aging school buses: $1,148,826
• Total - $37,776,001