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Leander ISD Going Into Debt To Build For The Future

Updated: Saturday, August 3 2013, 09:47 PM CDT

No matter where you live in Central Texas your tax money -- to the tune of billions of dollars -- is spent on school districts.

Rapidly growing districts like Leander are using huge sums of money on buildings to accommodate kids now and for the future.

"When my child graduates from high school they will start paying for the school," said Jim MacKay, a candidate for the Leander School Board.

MacKay is outraged over what he calls toxic borrowing, and the billions in debt the district has racked up.

"We have to start servicing that debt at some point and the only way we are able to do that is by starting to service our taxes."

According to an August 2012 report by the Texas Bond Review Board, Leander ISD has about $930 million in voter-approved debt, some of it capital appreciation bonds.

With interest, the report shows that debt ballooning to a total of $2.6 billion.

Capital Appreciation Bonds are a controversial type funding tool that delays payment for years, sometimes decades, but multiplies the end cost.

"They sell it on the fact that it’s not going to cost us anything right now or very minimal cost, and that’s because all of the interest is added on," said Texas State Representative Dan Flynn. "Just think about anything after 40 years, you've got a pretty good debt that you've accumulated."

Representative Flynn is attacking capital appreciation bonds in the Texas legislature.

Flynn told KEYE TV most of the public does not know how the bonds work or what type of debt they can create. He's calling for full transparency from Texas school districts.

"You can wake up and have a school district that has billions of dollars in debt and the general public has no idea," said Flynn.

The district counters that voters approved the money, and the bond review board’s information does not paint an accurate picture.

In a meeting with KEYE TV, representatives said if they did nothing from now until 2045, yes it would be at $2.6 billion, but the district says through a repayment strategy the actual debt is much closer to $1.3 billion.

"We do have on the books $1.3 billion in debt," said District Spokesperson Veronica Sopher.

Laying out that the bonds have callable features the district could utilize allowing them to erase millions in debt at time, and that they cannot issue more debt than what the tax base has granted them the ability to do.

"We want our tax payers to ask questions and find out am I really paying seven to nine times the value of this bond?" said Sopher. "No, no you're not, you are paying closer to 2.1 to 2.2."

"We have paid our debt aggressively, we have long-term plans to pay our debt, and we are financially sound," said Leander ISD board member Pam Waggoner.

Waggoner is currently on the board and up for re-election.

"Our students are coming; the worst thing that can happen is you don't plan for them and they come and you don't have a desk for them," said Waggoner.

According to a report from the Texas Comptroller, from 2001 to 2011 public school districts' total debt rose by more than 150 percent.

A huge chunk coming from voter-approved bonds.

Right now in Austin, the district is pitching nearly $1 billion in bonds to the voters.

According to the Comptroller’s report, the primary use of public education debt is school construction and renovation.

Some Texas cities are trying to keep up as they rapidly grow, but at what cost to the taxpayers?

"You can wake up and have a school district that has billions of dollars in debt and the general public has no idea," said Flynn.

The bonds have to pass a test through the Texas Attorney General's Office -- which they did.

Since the bond review board's report last year, Leander ISD representatives say that huge chunk of money people are looking at, they've been chipping away at it.

 Saying it cuts down the interest and in turn how much they owe.

By Adam RacusinLeander ISD Going Into Debt To Build For The Future



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