MISD Trustees hear scenario on reducing bond tally

MISD Board of Trustees hears scenario on reducing bond total

Bond could be reduced from $1.6 billion to $1.4 billion

 

August 10, 2023 — The Midland ISD School Board of Trustees met for a special meeting and workshop Thursday evening at Bunche Elementary to discuss the cost of the bond proposal made by the Bond Planning Committee.

Cost-Reduction Scenario

For the past month, Parkhill and Pfluger Architects, in conjunction with the district, have thoroughly reviewed the scope and cost of each project as well as reviewed projected enrollment and expected growth. 

On Thursday, Jay Edwards, president and CEO of Parkhill, presented opportunities to reduce the bond cost.

As proposed at the July regular meeting, bonds across two propositions would total about $1.68 billion.

Edwards said that when factoring in projected growth, one strategy for potential savings is the reduce each high school to a capacity of 3,800 students while maintaining core capacity at 4,200. With this approach, additional classrooms could be added based on actual growth in 10 years. Another area for savings was to remove the renovations to the two additional middle schools as part of grade reconfiguration and only adding the classrooms needed at the middle schools to accommodate growth and the transition of 6th graders into the middle schools.

Parkhill's estimate for the cost of a new elementary school, with a capacity of 830, in northeast Midland is $48.5 million compared to the $57 million in the current bond proposal.

All told, Parkhill says MISD can build two new high schools; renovate middle schools; improve safety, security and accessibility; address aging facilities districtwide, and build a new elementary school for about $1.4 billion.

Despite the difference in the overall total of the proposed projects, Edwards said the work of Pfluger — which is leading the bond proposal work for the district — is sound and that Parkhill’s determinations were very consistent with Pfluger.

Financial Impact

Midland taxpayers can expect lower school taxes regardless of whether a $1.4 billion or $1.6 billion bond passes.

Erick Macha, director at Hilltop Securities, told the board that the state passed tax relief for homeowners. The district’s maintenance and operations (M&O) tax rate is expected to fall from 84.5 cents to 66 cents.

Based on an average Midland home value of $340,000, for a $1.4 billion bond, the average homeowner is estimated to pay $29 per month in interest and sinking taxes. The I&S rate is designated for the repayment of debt. MISD currently has an 7-cent I&S rate, among the lowest in the state.

If a bond were to pass, the I&S rate would rise to 24 cents, which would still be among the lowest when compared to comparable districts. The highest I&S rate can be is 50 cents, and Macha said many districts are now in the 40- to 50-cent range.

Macha said that bonds aren’t sold in one lump sum. He anticipates four bond sales of $360 million each starting in 2024 if a $1.4 billion bond passes.

Good news for taxpayers is that any bond sale from MISD will receive the lowest interest rate available on the market thanks to the state’s Permanent Schools Fund, which provides bond payments when districts can’t.

This gives investors confidence that they will see a return on their investment, Macha said, adding that MISD has saved taxpayers $49 million by refinancing existing bonds to a lower tax rate and $10 million by paying off bonds early. MISD currently has a bond-repayment balance of $129 million across four bonds.

Second Day Enrollment

MISD reported an enrollment of 26,136 students on Thursday, the second day of the new school year. This is 335 more students compared to last year.

Save the Date

The next regular board meeting is scheduled for 5:30 p.m. Tuesday, Aug. 15, at the Bowie Fine Arts Academy auditorium, 805 Elk Ave.