Long Range Planning Committee

Meeting #2

November 4, 2020

Agenda

• Welcome & Intros
• Meeting 1 Recap/Questions
• School Finance 101
• Debt Capacity
• LHE Tour and Discussion
• Facility Needs 2020-2030
• Bond History
• Q&A/Closing

2

Meeting 1 Recap

Meeting 1 Recap

Introductions

4

One Word About LHISD

LHISD

Demographics

Committee Overview

and Timeline

Q&A/Closing

One Word to Describe LHISD

5

New Member Introductions

6

• Introductions

​

• Name

​

• Number of years in the LH community

​

• Role in the LH Community

​

• Children or grandchildren in the district

​

• Choose one word to describe Liberty Hill ISD

Questions from Meeting 1

7

• What are the challenges we face as a community and as a school district to continue the tradition of excellence and pride and grow at the same time?
• Quality teachers at competitive pay, Fast-growth,
• How many acres are needed to build a school the size of Burden or Santa Rita Elementary?
• 12 buildable acres is the bare minimum
• When it came to statistics, how were they determined? Understand it is a projection, but is there a better way to explain how the numbers were determined and based on what information lead to these projections?
• Demographers hired and follow lengthly process. Next report in Jan.
• Are there concerns related to deferred maintenance expenses on aging/existing buildings? How do those play into funding models going forward?
• Those costs will be projected and added to information for meeting #4.
• How can we ensure all schools are accountable for the same level of excellence?
• Quality of Facilities or Quality of Education?

​

​

Questions from Meeting 1

8

• Relationship between property taxes and bond issues.
• Will be covered tonight. Max 50 cents per $100 of prop value
• How to balance building a nice school but staying reasonable.
• These decisions will be part of our prioritization discussions in future meetings.
• How to keep small town feel as we grow.
• Collaborative ongoing effort and communication between all stakeholders
• Is this group too big to get discussion going?
• We will break into smaller groups as we proceed through meetings.

​

​

LHISD CFO

Mrs. Rosanna Guerrero

​

Funding for Texas School Districts

Finance 101

School Finance – The Big Picture

School districts are required to utilize fund accounting.

• Fund: self balancing set of accounts which are segregated for the purpose of carrying out specific activities

�LHISD utilizes several types of funds: 

• General Operating Fund (M&O taxes)
• Debt Service Fund (I&S taxes)
• Capital Projects Fund (Bond proceeds)
• Special Revenue Funds (Federal and State grant revenues)

​

5

School Finance – The Big Picture

A school district’s General Operating budget is generated from 3 main sources:

• Property Tax Collections - 62.4%
• State Funding - 35.6 %
• Federal funding – 1%

​

Remaining 1% from other Local funding (Interest Earnings, Donations, Athletic Revenues, etc)

Federal Funding

• Appropriated for special programs or to provide services to a specific group of students�
• Cannot be used to replace state or local dollars to fund a program (supplanting)�
• Restrictive spending requirements

​

State Funding

State Funding is VERY COMPLICATED

​

Foundation School Program provides funding to school districts and is administered by the Texas Education Agency (TEA)

​

Each district  receives a level of funding based on “wealth per student”

• Tax base divided by number of students 
• Lower “wealth per student” = more state funding
• Higher “wealth per student” = less state funding
• As local property values increase, the district receives less funding from the state

“Robin Hood” / Recapture

“CHAPTER 49”

DISTRICTS

​

​

Pay Recapture to State /

Receive Some State Funding

​

“GAP”

DISTRICTS

​

Pay Little or No Recapture Based on Tax Rate /

Receive Some State Funding

​

“CHAPTER 48”

DISTRICTS

​

​

Pay No Recapture /

Receive State Funding

​

Driven by property wealth per student

LHISD is a GAP District

Local Tax Effort

• Generated from property taxes (not sales taxes)�
• Williamson Central Appraisal District sets taxable home values�https://www.wcad.org/
• Called “ad valorem” taxes �
• Each year, a school district adopts two tax rates: 
• Maintenance & Operations -- (General Fund)
• Interest & Sinking -- (Debt Service)

Maintenance & Operations (M&O) Tax Rate

Funds the day-to-day maintenance and operations of the district:

• Salaries (for teachers and other staff)
• Facility repairs and maintenance
• Bus repairs, maintenance and fuel
• School supplies and materials
• Utilities (electricity, water, etc.)

For the average citizen, this is similar to:�

• House repairs
• Gas for your car
• Routine vehicle service
• Groceries
• Cleaning supplies
• Utilities

​

Interest & Sinking (I&S) Tax Rate

Funds the principal and interest payments on bonds authorized by the voters and issued by the District.

​

Cannot be used for salaries, utilities, or other day-to-day expenses for the district.

For the average citizen, this is similar to:�

• Mortgage
• Home improvement loan
• Vehicle loan
• Furniture financing

​

Local Tax Effort

M&O

​

The annual district budget is passed by the School Board of Trustees.

​

83% of the district’s M&O budget supports personnel salaries and related costs.

I&S

​

I&S funds may only be used to repay debt.

​

�They cannot be used for salaries, utilities or other day-to-day expenses.

Current Liberty Hill Tax Rate

M&O �TAX RATE

​

$0.86

I&S �TAX RATE

​

$0.50

TOTAL �TAX RATE

​

$1.36�per $100 of

property value

+

=

Tax Rate Comparison

LHISD Tax Rate History

Calculating Property Taxes

Appraised Value*

​

Set by WCAD

Combined Tax Rate

​

Adopted by LHISD

Property Taxes

​

Based on $100 per value

x

=

* Appraised Value minus any exemptions (example: Homestead Exemption)

​

Local Tax Effort

M&O

​

LHISD capped at $0.86 per $100 of property value in 2020-21.

​

​

LHISD Board has authorization to raise the M&O rate by $0.01.

​

If a district wants to raise the rate beyond the state rate, it requires voter approval through a Tax Ratification Election. 

I&S

​

Capped at $0.50 per $100 of property value.

​

​

Based on Expected Debt Payment, LHISD has maintained the $0.50 in 20-21.

​

​

LHISD Financial Status

Financial Transparency - https://www.libertyhill.txed.net/

​

�Financial Integrity Rating System of Texas (FIRST)

• Superior Rating - Score 92/100

​

​

​

Purchasing Award of Merit - 2021 Recipient

​

​

Debt Capacity��

What is a Bond?

​

Bonds are approved (authorized) by voters and later sold by a school district to lenders (underwriters) to pay for the costs of construction, acquisitions, renovations and equipment.

​

​

A school bond is similar to a home mortgage. It is a contract to repay borrowed money over time with a fixed or variable interest rate.

​

​

​

How Are Bonds Repaid?

INTEREST & SINKING (I&S) TAX RATE

The district levies an annual I&S tax rate against the taxable property in the District to make their debt payments.

​

​

50-CENT DEBT TEST

School districts must demonstrate to the Texas Attorney General that, with respect to the proposed bonds, the district has a projected ability to pay the principal of and interest on the proposed bonds and all outstanding bonds, from a tax at a rate not to exceed $0.50.

​

​

Debt Management

REPAYMENT TERMS

Maximum legal repayment term for school bonds is 40 years

• LHISD maximum maturity on issued debt is 30 years

​

BOND REFUNDINGS

LHISD analyzes refunding opportunities to:

• Achieve Interest Cost Savings
• Remove/change burdensome bond covenants
• Restructure stream of debt payment

​

CALLED BONDS

LHISD has options to pay off called bonds

• Pay off debt, increase capacity

​

​

​

​

​

Bond Capacity Analysis

INTEREST RATES

• Interest rates are not finalized for a bond issue until the day the bond issue is sold. Earliest date a district can sell their bonds is 1.5 months after a successful election.

​

• Interest rates are currently at historically low levels.

​

Bond Capacity Analysis

ASSUMPTIONS

• Maintain $0.50 Interest & Sinking (I&S) Tax Rate
• 97% Tax Collections
• Property Value Growth - Double Digit Growth
• Estimated Interest Rate 4%

Bond Capacity Scenarios

2 yrs:$ 215.3M

5 yrs:$ 436.65M

10 yrs:$ 802.42M

8 yrs:$ 636.05M

Bond Capacity Scenarios

Bond Capacity Analysis

QUESTIONS

Liberty Hill Elementary Tour

LHE Tour Discussion

Divide into five groups with a Group leader: Heather Collison, Aaron Russo, Steven Dorman, Casey Sledge, and Bob Mabry.

​

After the tour:

• As a group, identify 2-3 similarities between Santa Rita and Liberty Hill Elementary.
• Identify 2-3 differences between the two elementary schools that you’ve toured so far.
• Select a spokesperson and be prepared to share out.

38

Building Needs for Growth

​

Mr. Casey Sledge

Table Group Exercise

​

​

Compare the 2 schools we have toured

Santa Rita and LHE

​

Best things about both

​

​

Long Range Planning

​

​

LHISD Recent Bond History

Bond History

In Closing

Long Range Planning

• What size schools do we want?
• What size schools do we need?
• What can we afford?
• Long Term effects of our decisions?

​

Looking Forward

• WHEN: Our next meeting will be

Nov. 18th at 6:00pm

• WHERE: Liberty Hill Jr. High

40

Agenda

• Welcome & Intros
• Meeting 1 Recap/Questions
• School Finance 101
• Debt Capacity
• LHE Tour and Discussion
• Facility Needs 2020-2030
• Bond History
• Q&A/Closing

2

Meeting 1 Recap

Meeting 1 Recap

Introductions

46

One Word About LHISD

LHISD

Demographics

Committee Overview

and Timeline

Q&A/Closing

One Word to Describe LHISD

47

New Member Introductions

48

• Introductions

​

• Name

​

• Number of years in the LH community

​

• Role in the LH Community

​

• Children or grandchildren in the district

​

• Choose one word to describe Liberty Hill ISD

Questions from Meeting 1

49

• What are the challenges we face as a community and as a school district to continue the tradition of excellence and pride and grow at the same time?
• Quality teachers at competitive pay, Fast-growth,
• How many acres are needed to build a school the size of Burden or Santa Rita Elementary?
• 12 buildable acres is the bare minimum
• When it came to statistics, how were they determined? Understand it is a projection, but is there a better way to explain how the numbers were determined and based on what information lead to these projections?
• Demographers hired and follow lengthly process. Next report in Jan.
• Are there concerns related to deferred maintenance expenses on aging/existing buildings? How do those play into funding models going forward?
• Those costs will be projected and added to information for meeting #4.
• How can we ensure all schools are accountable for the same level of excellence?
• Quality of Facilities or Quality of Education?

​

​

Questions from Meeting 1

50

• Relationship between property taxes and bond issues.
• Will be covered tonight. Max 50 cents per $100 of prop value
• How to balance building a nice school but staying reasonable.
• These decisions will be part of our prioritization discussions in future meetings.
• How to keep small town feel as we grow.
• Collaborative ongoing effort and communication between all stakeholders
• Is this group too big to get discussion going?
• We will break into smaller groups as we proceed through meetings.

​

​

LHISD CFO

Mrs. Rosanna Guerrero

​

Funding for Texas School Districts

Finance 101

School Finance – The Big Picture

School districts are required to utilize fund accounting.

• Fund: self balancing set of accounts which are segregated for the purpose of carrying out specific activities

�LHISD utilizes several types of funds: 

• General Operating Fund (M&O taxes)
• Debt Service Fund (I&S taxes)
• Capital Projects Fund (Bond proceeds)
• Special Revenue Funds (Federal and State grant revenues)

​

5

School Finance – The Big Picture

A school district’s General Operating budget is generated from 3 main sources:

• Property Tax Collections - 62.4%
• State Funding - 35.6 %
• Federal funding – 1%

​

Remaining 1% from other Local funding (Interest Earnings, Donations, Athletic Revenues, etc)

Federal Funding

• Appropriated for special programs or to provide services to a specific group of students�
• Cannot be used to replace state or local dollars to fund a program (supplanting)�
• Restrictive spending requirements

​

State Funding

State Funding is VERY COMPLICATED

​

Foundation School Program provides funding to school districts and is administered by the Texas Education Agency (TEA)

​

Each district  receives a level of funding based on “wealth per student”

• Tax base divided by number of students 
• Lower “wealth per student” = more state funding
• Higher “wealth per student” = less state funding
• As local property values increase, the district receives less funding from the state

“Robin Hood” / Recapture

“CHAPTER 49”

DISTRICTS

​

​

Pay Recapture to State /

Receive Some State Funding

​

“GAP”

DISTRICTS

​

Pay Little or No Recapture Based on Tax Rate /

Receive Some State Funding

​

“CHAPTER 48”

DISTRICTS

​

​

Pay No Recapture /

Receive State Funding

​

Driven by property wealth per student

LHISD is a GAP District

Local Tax Effort

• Generated from property taxes (not sales taxes)�
• Williamson Central Appraisal District sets taxable home values�https://www.wcad.org/
• Called “ad valorem” taxes �
• Each year, a school district adopts two tax rates: 
• Maintenance & Operations -- (General Fund)
• Interest & Sinking -- (Debt Service)

Maintenance & Operations (M&O) Tax Rate

Funds the day-to-day maintenance and operations of the district:

• Salaries (for teachers and other staff)
• Facility repairs and maintenance
• Bus repairs, maintenance and fuel
• School supplies and materials
• Utilities (electricity, water, etc.)

For the average citizen, this is similar to:�

• House repairs
• Gas for your car
• Routine vehicle service
• Groceries
• Cleaning supplies
• Utilities

​

Interest & Sinking (I&S) Tax Rate

Funds the principal and interest payments on bonds authorized by the voters and issued by the District.

​

Cannot be used for salaries, utilities, or other day-to-day expenses for the district.

For the average citizen, this is similar to:�

• Mortgage
• Home improvement loan
• Vehicle loan
• Furniture financing

​

Local Tax Effort

M&O

​

The annual district budget is passed by the School Board of Trustees.

​

83% of the district’s M&O budget supports personnel salaries and related costs.

I&S

​

I&S funds may only be used to repay debt.

​

�They cannot be used for salaries, utilities or other day-to-day expenses.

Current Liberty Hill Tax Rate

M&O �TAX RATE

​

$0.86

I&S �TAX RATE

​

$0.50

TOTAL �TAX RATE

​

$1.36�per $100 of

property value

+

=

Tax Rate Comparison

LHISD Tax Rate History

Calculating Property Taxes

Appraised Value*

​

Set by WCAD

Combined Tax Rate

​

Adopted by LHISD

Property Taxes

​

Based on $100 per value

x

=

* Appraised Value minus any exemptions (example: Homestead Exemption)

​

Local Tax Effort

M&O

​

LHISD capped at $0.86 per $100 of property value in 2020-21.

​

​

LHISD Board has authorization to raise the M&O rate by $0.01.

​

If a district wants to raise the rate beyond the state rate, it requires voter approval through a Tax Ratification Election. 

I&S

​

Capped at $0.50 per $100 of property value.

​

​

Based on Expected Debt Payment, LHISD has maintained the $0.50 in 20-21.

​

​

LHISD Financial Status

Financial Transparency - https://www.libertyhill.txed.net/

​

�Financial Integrity Rating System of Texas (FIRST)

• Superior Rating - Score 92/100

​

​

​

Purchasing Award of Merit - 2021 Recipient

​

​

Debt Capacity��

What is a Bond?

​

Bonds are approved (authorized) by voters and later sold by a school district to lenders (underwriters) to pay for the costs of construction, acquisitions, renovations and equipment.

​

​

A school bond is similar to a home mortgage. It is a contract to repay borrowed money over time with a fixed or variable interest rate.

​

​

​

How Are Bonds Repaid?

INTEREST & SINKING (I&S) TAX RATE

The district levies an annual I&S tax rate against the taxable property in the District to make their debt payments.

​

​

50-CENT DEBT TEST

School districts must demonstrate to the Texas Attorney General that, with respect to the proposed bonds, the district has a projected ability to pay the principal of and interest on the proposed bonds and all outstanding bonds, from a tax at a rate not to exceed $0.50.

​

​

Debt Management

REPAYMENT TERMS

Maximum legal repayment term for school bonds is 40 years

• LHISD maximum maturity on issued debt is 30 years

​

BOND REFUNDINGS

LHISD analyzes refunding opportunities to:

• Achieve Interest Cost Savings
• Remove/change burdensome bond covenants
• Restructure stream of debt payment

​

CALLED BONDS

LHISD has options to pay off called bonds

• Pay off debt, increase capacity

​

​

​

​

​

Bond Capacity Analysis

INTEREST RATES

• Interest rates are not finalized for a bond issue until the day the bond issue is sold. Earliest date a district can sell their bonds is 1.5 months after a successful election.

​

• Interest rates are currently at historically low levels.

​

Bond Capacity Analysis

ASSUMPTIONS

• Maintain $0.50 Interest & Sinking (I&S) Tax Rate
• 97% Tax Collections
• Property Value Growth - Double Digit Growth
• Estimated Interest Rate 4%

Bond Capacity Scenarios

2 yrs:$ 215.3M

5 yrs:$ 436.65M

10 yrs:$ 802.42M

8 yrs:$ 636.05M

Bond Capacity Scenarios

Bond Capacity Analysis

QUESTIONS

Liberty Hill Elementary Tour

LHE Tour Discussion

Divide into five groups with a Group leader: Heather Collison, Aaron Russo, Steven Dorman, Casey Sledge, and Bob Mabry.

​

After the tour:

• As a group, identify 2-3 similarities between Santa Rita and Liberty Hill Elementary.
• Identify 2-3 differences between the two elementary schools that you’ve toured so far.
• Select a spokesperson and be prepared to share out.

38

Building Needs for Growth

​

Mr. Casey Sledge

Table Group Exercise

​

​

Compare the 2 schools we have toured

Santa Rita and LHE

​

Best things about both

​

​

Long Range Planning

​

​

LHISD Recent Bond History

Bond History

In Closing

Long Range Planning

• What size schools do we want?
• What size schools do we need?
• What can we afford?
• Long Term effects of our decisions?

​

Looking Forward

• WHEN: Our next meeting will be

Nov. 18th at 6:00pm

• WHERE: Liberty Hill Jr. High

40