A school bond election is held so that voters can consider proposed construction and capital improvement projects. Similar to a family’s mortgage, school districts issue loans, known as bonds, to pay for capital expenditures. The district pays the debt back long-term, similar to a home mortgage. Like a mortgage, bonds allow the cost of facilities to be paid for over a timeline that approximates the useful life of the facilities. Bonds are sold by a school district in the public securities markets to raise funds to pay for the costs of construction, renovations and equipment. Most school districts in Texas utilize bonds to finance renovations and new facilities. Districts repay the bonds through revenue generated from a debt service property tax. A district’s voters must approve capital improvement bonds issued by a school district.
Under Texas law, bond funds may only be used to pay for non-recurring expenditures for items with a useful life of more than one year, such as new buildings, additions and renovations to existing facilities, purchasing land, and equipment for new or existing buildings. Bond funds CANNOT be used for employee salaries, operating costs such as utility bills, supplies, fuel, and insurance. The Pine Tree Independent School District, like all school districts in Texas, uses its maintenance and operating (M&O) budget to fund salaries, curriculum and other operating expenses.
UNDER TEXAS LAW, BOND FUNDS MAY ONLY BE USED TO PAY FOR NON-RECURRING EXPENDITURES OR FOR ITEMS WITH A USEFUL LIFE OF MORE THAN ONE YEAR, SUCH AS NEW BUILDINGS, ADDITIONS AND RENOVATIONS TO EXISTING FACILITIES, PURCHASING LAND, AND EQUIPMENT FOR NEW OR EXISTING BUILDINGS.
A school district’s general operating expenditures include payroll, utilities, supplies and other costs associated with the ongoing operations of the school district. While districts may be able to address smaller capital items using general operating funds, school districts do not receive enough funding to cover the cost of large construction and/or renovation projects like those proposed in the bond.
The following items were discussed during meetings regarding the economic climate:
Construction costs are generally lower in this type of an economic climate.
Interest rates are low right now.
Quality School Construction Bonds funds, which save on debt payments, are available only if we sell bonds by this July.
The state's current budget woes will only affect one of the two types of funds that a school district uses: called our “Maintenance and Operating or M&O” pot of money. The other type of funds, called the “Interest and Sinking, or I&S” is a separate pot of money which is not affected by the state budget.
Regardless of the economic climate, it is the District’s mission to provide facilities that will accommodate all learning, co-curricular, and extra-curricular activities.