On Nov. 2, Superintendent John Craft of the Killeen Independent School District, told the bond steering committee, “Think about a bond like a mortgage.”
Craft continued his definition of a bond as an investor loaning money to the school district with interest.
Like a mortgage, the money investors lend to the district when they purchase the bonds must be paid back over a period of years, Craft said.
The district’s 2002 bond issue of $98.72 million had a term of 26 years and is being paid back as the district seeks another bond.
Property owners in the district contribute to the 2002 bond repayment through their taxes.
According to a definition from the Texas Education Agency, “A district’s property tax rate consists of a maintenance and operations (M&O) tax rate and, if applicable, an interest and sinking (I&S) tax rate. The M&O tax rate provides funds for maintenance and operations. The I&S tax rate provides funds for payments on the debt that finances a district’s facilities.”
KISD’s tax rate for fiscal year 2018 is $1.11 per $100 of property value. Of that rate, $1.04 is for maintenance and operations and $0.07 is for interest and sinking.
That interest and sinking tax rate will be impacted by the proposed bond issue currently being discussed by the district and the KISD bond steering committee.
Since 2000, both the maintenance and operations and interest and sinking tax rates have fluctuated for those living in the Killeen school district.
The maintenance and operations tax rate rose from $1.384 per $100 valuation in 2000 to a high of $1.425 in 2003. Since that time, it has gradually decreased to its present rate of $1.04.
The interest and sinking tax rate jumped from $0.044 in 2000 to $0.1383 in 2003 after the last bond election. The interest and sinking tax rate began to decrease in 2006, and currently stands at $0.07.
According to Craft, without an additional bond issue in 2018, the interest and sinking rate would further decrease in 2018 to $0.04.
The amount collected by the district from these taxes has continued to increase since 2000.
The Bell County tax collector calculated the “levy” or amount collected for KISD in 2000 as over $35.5 million. In 2003, KISD received over $48.4 million in property tax revenue.
The amount continued to rise, even as the tax rate decreased in subsequent years. That was because an increasing number of homes built were in the district. From nearly $69 million in 2010, the property tax revenue collected for the district rose to over $84.3 million in 2017.
The district’s budget for 2018 calls for $77 million in local money. The total budget is more than $382.88 million and includes $51.1 million from federal sources and $254 million from state funding.
Of the federal funding, $47.6 million is in Impact Aid, money given to school districts in which property is taken off tax rolls due to federal activity, such as Fort Hood.
The district spent $8,663.82 per student from the maintenance and operation budget in the 2017-18 year, according to figures presented at the steering committee meeting Thursday.
The question faced by the KISD bond steering committee at the meeting Thursday revolved around possible amounts for the proposed bond issue, the interest rate and the length of time before the bonds would be repaid in full.
The district is hoping everything will fall into place in time for the board to meet a Feb. 16 deadline to call for a bond election for May 5, 2018.
The amount of that bond could be as high as $500 million, if all projects under consideration by the district and the bond steering committee would be included.
Three new elementary schools, a middle school and a high school are listed on KISD’s Strategic Facility Plan, and could be included in the bond issue. Removed from the list was a stadium, estimated to cost $50 million. The stadium is no longer under consideration, per Craft’s statement during Thursday’s bond steering committee meeting that the focus of the bond issue will be on instructional spaces.
Renovations to 12 older school buildings in the district are under consideration for the bond issue. Among those renovations would be replacing 239 aging, inefficient heating and air conditioning units.
Purchasing new school buses, or retrofitting older buses with seat belts had been mentioned by Craft as another potential inclusion for the bond issue, but will not be under consideration at this time, Craft said Thursday.
At Thursday’s bond steering committee meeting, Matthew Boles and Derek Honea of RBC Capital, Dallas, highlighted three scenarios for the bond issue, and how each would affect taxpayers.
Scenario 1 listed the bond as $175 million. That amount would raise the interest and sinking tax rate from its current $0.07 to $0.105. The owner of a home valued at $150,000, minus the homestead exemption, would see a yearly increase in the property taxes of approximately $44.
Scenario 2, as proposed by RBC Capital, has the bond amount at $350 million. The interest and sinking tax rate would jump from $0.07 to $0.17 percent, meaning property taxes would rise approximately $127 per year on a home valued at $150,000, minus the homestead exemption.
Scenario 3 would be a $500 million bond issue. A yearly property tax increase of approximately $209 would be seen by owners of a $150,000 home, minus the homestead exemption. That translates into an increase in the interest and sinking tax rate from its current $0.07 to $0.24.
The proposed bond would have a 30-year amortization, or length. Boles said it could be refinanced — or “refunded” — if interest rates dropped, to save the district additional money.
The next bond steering committee meeting will be at 6 p.m. Thursday at the KISD Career Center, 1320 Stagecoach Road.