Exploring Allen ISD's $447 Million Bond Proposal: Key Projects and Tax Implications

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I mean, as Matt, as you know, you've attended several presentations. Kyle

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has 2 of of us talking about the the bond election and the bond proposals

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to the community. And and a question that comes up a lot of times is

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what is it going to cost the taxpayer? What is the impact to the tax

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rate? And so the information that that we to make sure we provide

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everybody is is we start back in the 2020 bond. And so in the

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2020 bond, that interest in sinking tax rate was 41¢.

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So for easy math, you take your taxable value of your home, you divide it

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by a 100, multiply it by that 41¢, and that's the portion of your tax

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bill that goes to the interest in sinking account. It was at 41¢.

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In 2020, that bond the, language used there as

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well was that there would be no increase to that interest in sinking tax rate.

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And over time, since 2020, that portion of the tax

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rate has actually decreased to 2 pennies. It's currently at 39¢.

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Howdy, friends, and welcome to the Allen Fairview Insider, the podcast where we

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dive deep into the heart of our community. I'm your host Super Dave Quinn

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with Day 1 Experts, and I'm here to help bring you the latest and greatest

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from Allen and Fairview. From insightful interviews with our local leaders

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to exclusive updates on community events and developments, the Allen

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Fairview insider is your go to source for staying connected and informed.

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So whether you're at home or at work or on the move, let's get started

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and make the most of our time together. Hi. And

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today, we'll we're discussing with Allen ISD the upcoming

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bond election, and we're joined by doctor Robin Bullock, Allen

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ISD superintendent, and Brian Carter, chief financial officer

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for Allen ISD. Thanks, Robin and Brian, for joining

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us today. Absolutely. Thank you for having us. Yeah. Thank

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you. I always like to start these conversations with a little bit of a

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softball for our listeners that may not be

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as familiar with the Allen School District. So tell us a little bit about

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the school district, how many kids, how many campuses, how many employees.

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All right, well that is a softball one, so thank you for that. We have

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in Allen ISD, as you know and probably

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many of our listeners or viewers know, we have a great school district, a

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supportive community and, something that I'm

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extremely proud and blessed to be a part of. We have about

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20,800 kids, so we're right at 21,000 students this

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year. We've got 16 elementary campuses and early childhood,

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excuse me, elementary campuses and early childhood center, and then

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we've got 3 middle schools, our freshman center, and our high school.

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And so that makes up our almost 21,000 students in

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all of those campuses. We have about 2,800 employees, and

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so we are the largest employer in the city, And, so

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we are we are very proud of that. We just had a a niche rating,

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that was launched statewide that ranks school

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districts in the state and really in the country as well. And we're

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number 6 in the state. We're number 1 in Collin County. We're 90th

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in the country, out of over 10,500, and so, we're

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really doing great things here from all aspects, from a curricular

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standpoint and curriculum, academic standpoint, and just supporting

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our kids, supporting our kids and their their growth. That's

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awesome. I actually did a little bit of Googling before I got here and I

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know it's always dangerous when you do that, but I also saw

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that we were 7th by Dave Ramsey

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in the entire state That doesn't surprise me. Which is, you

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know, kind of a guy that knows a little bit about finances, I think you

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could say. And so I thought, Brian, next, we would we

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would go with the hard questions for you, if that's okay. Oh, nothing nothing

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but the best right here. Let's do it. So I know that we could

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do probably an entire lecture series

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of hours on the topic of school finance

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here today. But if you could briefly go through

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the different types of taxes or the different tax

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levels that the school district has and what they can do with those

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taxes. Sure. Absolutely. So and, again, thank you for the opportunity to to

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talk with you guys this morning. The so in the school finance

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101 setting, the taxpayer will see a single tax rate. For

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instance, this year, the school board adopted a tax rate of a dollar 12.

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Inside the school districts, that is actually made up of 2 buckets.

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We have a what's called a maintenance and operations. Part of that tax rate, which

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is 73¢ of that dollar 12. Now we have an interest in

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sinking side of the tax rate, which is 39¢.

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The maintenance and operations part of that tax rate is the day to day expenses.

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80% of that is salaries for our staff, and the

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other 20% is utilities and and soft cost supplies,

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materials, things of that nature. The interest in sinking

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portion of that tax rate, the 39¢, can only be used,

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to pay our mortgage, basically, is how I equate that to our homeowners. It's how

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we pay for the debt that is associated with school district bond

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elections. And, so those 2 buckets are mutually

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exclusive. We cannot mix funds, across those.

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We get a a question every now and then. Can we pay teacher salaries from

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the debt portion of the tax rate? And and that answer is no. We cannot

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mix those together. In our personal houses, we may just have one checkbook that

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writes a check for all of our expenses. In a school district, we have to

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keep those 2 checkbooks completely separate. Well, that's

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that makes it a little bit easier. I I always like to tell folks that

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it's teacher salaries and stuff and buildings and things.

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Yeah. It's kind of the the best way I I usually kind of

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outline those 2. And so I know this coming November and the reason

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we're we're talking right now is that Allen ISD residents have an

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opportunity to vote on a $447,000,000

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investment in the school district, essentially. Can you talk to

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me a little bit about what's included in that investment? I

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I know your colleague couldn't be here, but I'm sure y'all too have heard

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the the pitch enough to tell me. Sure. So within

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that bond proposal of it's $447,499,700.

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There are 3 propositions in there. By legislative statute, we do

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have to separate, that bond election into different propositions depending

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on, what the purpose of those dollars would be. And so

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roughly 419,000,000 of that is in

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proposition a, which is, dealing with our campus

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improvements, the a lot of the renovations that go to those campuses, our safety

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and security upgrades across the district, and then other capital

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improvements, things as simple as as concrete and and

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waterproofing of facilities to those full blown campus

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renovations. I believe we have 7 campuses that are in there in that bond

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election to receive a complete renovation inside and out, front to

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back. And then proposition b is about

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5,300,000 or so. That is for the

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resurfacing of 2 track facilities within Allen ISD. That's at the

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Lowry Freshman Center and Curtis Middle School. Those facilities have to

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be in their own proposition legislatively because those facilities seat more than a

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1000 people. And so any renovation to a facility of that

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nature has to be in its own proposition. And then we have our 3rd proposition

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c for technology devices. That is to support our 1 to 1

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environment. So our students are all in a 1 to 1 device program and

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also for our teachers' instructional devices when you walk into a

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classroom and and see devices at that teacher's workstation

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on that he or she uses to instruct class on a on a day to

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day operation. And so those devices must be in their own proposition.

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So 3 propositions, as you mentioned, totaling about $447,000,000.

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And I'll just add to you, Matt, if if you if I can real quickly,

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the proposition a, I know that he mentioned the campus renovations

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and and some other things. Technology, there's some infrastructure type stuff

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in that, but it's it's 2. We've got safety and security upgrades

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to the campuses, camera refreshes and additions to

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run more up to date technology on those camera systems,

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and then transportation of buses, buying some buses, upgrading the systems

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on the buses to include a GPS top tracking system so that

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parents can know where their kiddos are and when they get on and off the

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bus and those kinds of things as well. So that prop a, which he talked

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about, is the largest one and it includes a lot of

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things. Yeah. One of the things that I get to learn

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a lot about in my volunteerism with the city is a lot of

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parks department items. And I know if I if

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I have heard it once, I've heard it a 1000000 times, the words pickleball.

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And so I I heard a rumor, and so I thought maybe you might

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clarify this and help me with it. 1 of the tennis courts may

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or may not be lined with pickleball courts for community use.

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Go ahead, Brian. I know you're the pickleball guy, so go ahead. Well, this was

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not my idea. This is not the communities, the project kids

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group, but, yes, we do have some tennis courts at the Lowry Freshman Center

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that have been closed for years. And I don't know the exact number of years,

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but probably in excess of 7 or 8 years, the foundation of those courts is

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is unplayable and unusable. And, so as the project

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kids group, was going through the project list for this proposed

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bond election, those tennis courts came up, number 1,

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the ability to resurface and and, repurpose

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those courts to where they're usable now, a, it would take some some stress

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off of our high school competition courts for our freshman center. But then they had

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brought up that if the courts were going to be resurfaced and and

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redone, would we also look at including pickleball lines

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there so that the community could use those courts in the evenings? And we

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absolutely said if that's if that's what the Project Kids Group would like to

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to put into this bond proposal, we would be more than happy to to have

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that contractor put those lines down, and then that would be open for community play

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in the evenings. Like I said, as a as a parks guy, I love to

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hear that, and and I particularly love the the

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amount of partnership that the school district and the city have on a lot of

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those parks facilities and different natures. So that's that's really

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great. One of the things that I know a lot of

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folks are gonna wanna to talk about is is the tax

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rate. Mhmm. And particularly the the

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INS rate both before and after this bond. So can you

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talk a little bit about where you see that rate

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today? Does it go up with this? Are we gonna what does that look

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like? Sure. Absolutely. And that's a a very common question. I

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mean, as Matt, as you know, you've attended several presentations. Kyle

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has 2 of of us talking about the the bond election and the bond proposals

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to the community. And and a question that comes up a lot of times is

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what is it going to cost the taxpayer? What is the impact to the tax

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rate? And so the information that that we to make sure we provide to

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everybody is is we start back in the 2020 bond. And so in the

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2020 bond, that interest in sinking tax rate was 41¢.

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So for easy math, you take your taxable value of your home, you divide it

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by a 100, multiply it by that 41¢, and that's the portion of your tax

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bill that goes to the interest and sinking account. It was at 41¢.

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In 2020, that bond the, language used there as

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well was that there would be no increase to that interest in sinking tax rate.

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And over time, since 2020, that portion of the tax

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rate has actually decreased to 2 pennies. It's currently at 39¢. So

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not only were we able to not increase that tax rate at all, but we

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were actually able to reduce it by 2 pennies. When you look at the total

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tax rate, which is another piece of it, our total tax rate in

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Allen ISD in 2020 with that bond election was a dollar 43.

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That tax rate now, the total tax rate that was adopted in August is a

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dollar 12. So the total tax rate has actually dropped 31 pennies.

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Now 2 pennies of those have been associated with the debt side. But when I

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talk to community members, but the total tax rate that is on that statement is

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down 31¢. And so with this current bond election of

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447,000,000 and and change, we will be able to do that

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that same item as we did in 2020. There would we can use that

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existing tax rate of 39¢ to fund this level of debt.

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So we we were able to do that in in 2020, and and we're confident

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we'll be able to do that again in in 2024. Howdy, friends. Super

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Dave Quinn here. Thinking about expanding or relocating your business in

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Collin County? Come discover Fairview, Texas, a community with

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a prime location, great tax incentives, and an unbeatable quality of

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life. But don't just take my word for it. Tune in to the Getting

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Fairview is the perfect place to grow your business and to build your

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life. Visit us today at fairviewtexasebc.com.

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Thanks. Make it a great day. Every campus, I think I've heard y'all mention this.

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Right? Every campus is touched by this this bond in one way. Every

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student will be impacted in one way, shape, or form, and

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there there is not any sort of tax increase with this.

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And I think a lot of times that can be really hard to just

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wrap our brains around. Right? Like, it it when you say,

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hey, man. I wanna I wanna borrow this amount of money, but you're

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never gonna have to pay me anymore. You than what you pay me now is

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kind of complicated. Can you talk a little bit about

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how the school district manages that debt? Because I

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really think that's the the key to the the question. Right? Like, if

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I took out $447,000,000 in debt, that's a totally different thing

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than than how you might do it. Sure. Absolutely. And and there's

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a big difference between the property taxes and the property tax rate.

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The way we look at that is I always try to equate everything I talk

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about in school finance to our own personal lives to try to make that connection

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to make it easier to understand. And so the example I use is is let's

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assume that you have a home mortgage that you've done for $400,000,

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and you've chosen 25 years on that mortgage repayment. So in

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Texas, a school district can sell its debt or borrow money on up to

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40 years on up to a 40 year term. Allen ISD has chosen to

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limit that to 25 years. When we have a home mortgage, that $400,000

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mortgage on 25 years, we have the one mortgage. We have the

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same debt payment or the same mortgage payment every month for 25

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years, assuming we don't do improvements to our home or something like that. In a

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school district's debt environment or mortgage environment, we have

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25 individual mortgages, mortgage 1 through mortgage

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25. Each one of those has a different amount of debt in it

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at a different interest rate. So how we manage that is we work

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with Hilltop Securities. Jeff Robert is our financial adviser over there. He's been with the

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district for a long time. So we go out each year and look at that

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debt profile of those 25 individual mortgages and

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go to the market to see, is there an interest rate environment out there

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in any one of those 25 categories, 25

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years, that is better than the rate that's there right now? And if there

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is, then we take that to the board of trustees with saying we just brought

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1, to the school board in August. That is a mixture of lower

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interest rates and an additional additional prepayment to our principal just like in our

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home mortgage if we chose to make an additional $200 payment each month on our

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mortgage. So we actually just brought a 30 +1000000 dollar debt

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service savings to the board of trustees in August. It'll take all all

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fiscal year. It'll take between now and and February, March to

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finish that. But so that is how we manage the first piece of it is

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we look out every year to see, is there a better interest rate environment in

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any one of those 25 years that we can, a, reduce the interest expense, which

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means the taxpayer dollar is working harder for them within the school district? B, is

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there an opportunity to make an additional payment on principal, which reduces the

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life of that loan? And then, c, just to maximize those taxpayer

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dollars. So that's how we manage that debt every year. The other part of it

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goes into play of when we go to borrow money, and

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and I'm sure we can talk more about this as we go through here, but

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we match the debt to the life cycle of that asset.

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And so, for instance, proposition c on our technology devices, those

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are our Chromebooks for our students. They have an average life of 4 to 5

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years. When we go out and borrow money to replace some of those Chromebooks,

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we only put that debt in the first four years of that 25 year profile

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so that we're not paying interest in year 8 for a Chromebook that is no

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longer within the district. Same thing on school buses. School buses have a life of

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about 10 years, so we sell that debt across a 10 year profile instead

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of carrying it out 25 years. So another way or or

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I guess another question some folks might have is so, like, let's say

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my son goes to Cheatham Elementary. Right? And I think I

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saw Cheatham is on the list for a renovation, which is

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amazing. But it let's say that's at the in

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2029. I don't know where it is on the schedule. Let's say it's at 2020.

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You don't borrow the money for that today as soon as it's approved.

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Right? You you wait until you get to that point, and then

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you borrow that money. So all of the debt isn't necessarily

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incurred on November 3rd at the the day after the

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election. Right? Correct. Yes. And so the way that works, if an

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election is successful, what really the voters have told Allen

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ISD is we have approved you to borrow 400

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$47,499,700, and then the

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district then completes the projects that they have told the community that they would

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do. And so the way that works is then my team and our

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facilities team are getting together, and we're looking 12 to 18 months

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out. So it would be pretty much all of 2025 and half

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of twenty six. Within our project list, what is the total

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value of cash that we would need to fund those projects over that next 12

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to 18 months? The example I use is, so for instance, if that number is

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$80,000,000, then we would go to the market to borrow that first

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80,000,000, complete those projects. And then as that

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18 month period is coming to a close, we do the same thing all over

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again, so then for the next 12 to 18. So that

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$447,000,000 would take probably 3

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to 3 and a half years in order to borrow all of that debt. So

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to your point, we do not go out and borrow it all at the beginning

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because if a project is not slated to happen until 3 years

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from now, we don't want to be paying on a project that we haven't even

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started yet. You know, I know we're getting kinda close on time, so I

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have one last question. One of the things that I I love

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about Alan is that when folks live move here,

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they really kinda stay here, and we stay long term, and this has been

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an amazing community. You know, I was looking it up. We talked about some

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ratings that that the the school district has gotten recently.

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I saw, WalletHub made Allen ISD

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the 2nd most or Allen, excuse me, the city of Allen.

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The it was the 2nd most affordable city in the state, which is

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a is is in another amazing feat in all of that by

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itself. But one of the things that that brings is folks live here a long

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time, and they stay here. And so we have a number of

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members of our community that are over the age of 65. And

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so I thought you might kinda mention what happens

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to their tax rate because I know there's some tax exempt you know,

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exemptions for tax freezes at the age of 65.

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How does this impact them? Sure. So, yes, if you live

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in Allen and and you're over 65 and, I believe the city of Allen's

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website has those forms on there that you can can, request for the

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over 65 exemption. What that does is that freezes the tax levy

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or the amount of school district taxes for the rest of your life.

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And so if you if I I'm a long way

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from 65, thankfully, but but at that point in time, for example,

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if my if the school district portion of my tax bill, right, so we

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also there's also city, county, around the state. You may have a a MUD

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district or something like that. But if the school district portion of my taxes

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was $3,000 this year and I filed that exemption, it remains

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$3,000 for the rest of your life unless you do some major

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renovations to your home. But barring that, it remains at

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at $3,000. And so for an over 65

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exemption, the district's bond election

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has zero impact on their future tax bills because their tax levy

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is frozen. I I do wanna end with giving y'all an opportunity. Is there

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anything that you wanna add maybe that we didn't that we didn't talk

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about or or an important piece of the bond that you you

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really wanna highlight again that to make sure that the community members

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know? Ron, you may wanna add to this. You know, I he he

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alluded to it just a little bit and going back to values

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and tax rates and those kinds of things. You know, the district doesn't set the

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value of somebody's home and people like high, home

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values whenever they're selling their home, but they don't necessarily like to

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pay those taxes on it when they're when they're staying in it. But so I

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think that there's a lot of misconfusion out or some confusion out

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there related to my property values are going up or my home values

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going up, the district should have more money. And, Brian, I didn't know if you

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wanted to touch on that just really quickly. I know we're running out of time,

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but I think that's probably an important piece as well just just because we've been

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so finance focused on this on this particular call. Sure. Yeah.

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That is a it's the double edged sword of a declining tax rate. So the

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school district has the lowest tax rate since 1993, but

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our homes are worth more than they've ever been. And so how do you

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explain a a declining tax rate and increasing home values and

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someone says, well, my school district part of or my total tax

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bill was $4,000 3 years ago, and now it's $6,000. And

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so the school district should have have more money, but as those property

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values go up, our tax rate on that goes

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down. And so when you have an increasing value and a declining tax

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rate, they net against each other in the first phase. And in the second phase,

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Allen ISD is, part of the Robinhood program or recapture

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program within the state of Texas, which is a a program designed

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around property wealthy school districts. So this year, we do have budgeted

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about $4,000,000 of our local tax collections to be sent back

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to Austin as part of that recapture program. So we have had that

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that question that doctor Bullock has just mentioned. And but the increasing values are

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matched with a declining tax rate to keep that revenue stream fairly

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level. Yeah. Well, again, I just wanna thank y'all again

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for for taking some time today. I know early voting starts, I think, in

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2 weeks. Right? I think right at 2 weeks. So,

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yeah, we're we're excited. I know the chamber and I I think

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Kyle Jacobson, the new chamber CEO, is with us. I know the chamber

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adopted a resolution of support of the bond, and so

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I I really hope that our viewers and listeners get

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an opportunity to get out and vote and ask questions, and I know y'all are

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got many more roadshows, coming along the way. And so thank

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y'all again, and we'll talk to you real soon.

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Thank you for tuning in to the Allen Fairview Insider, the official podcast

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of the Allen Fairview Chamber of Commerce. We hope you enjoyed today's episode and

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found the insights valuable. Don't forget to subscribe to

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to help spread the word about our great communities.

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We appreciate your support and are excited to bring you more

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00:23:03,870 --> 00:23:07,550
engaging content. I'm your host super Dave Quinn, thanking you on

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behalf of the Allen Fairview Chamber of Commerce for listening and

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reminding you to stay involved, stay informed, and keep making

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Allen and Fairview the best place to live

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in Texas.