why frisco isd’s $775 million bond is a bad deal for taxpayers · 4/29/2014 why frisco isd’s...

4/29/2014 Why Frisco ISD’s $775 million bond is a bad deal for taxpayers | Dallas Morning News

http://www.dallasnews.com/opinion/latest-columns/20140427-why-frisco-isds-775-million-bond-is-a-bad-deal-for-taxpayers.ece 1/8

By JESS FIELDS

Published: 27 April 2014 08:18 PM

Updated: 27 April 2014 08:31 PM

Why Frisco ISD’s $775 million bond is a bad deal for taxpayers

The Dallas Morning News recently ran a story about how Frisco ISD’s $775 million bond proposal is facing significant opposition and

skepticism from the community. This shouldn’t come as a surprise to anyone who has noticed Texans’ weariness of ever-increasing debt

and taxes.

While most Texans clamor for putting the brakes on runaway government spending and debt, Frisco ISD has put its foot on the gas pedal.

And it could end up costing taxpayers big-time.

Property owners in Frisco ISD could see a noticeable tax increase should the district’s bond package succeed. If the bond is approved,

the average homeowner could see a tax increase of $206.40 per year, based on Frisco ISD’s own estimates that its average home value

is $272,801. This piles on more taxes on top of the state’s above-average per person property tax burden, ranked as the 15th-highest in

the nation.

Admittedly, Frisco is a fast-growing school district; but its debt load is already enormous and this large, new debt could max out the

district’s debt service tax rate entirely, rendering it incapable of borrowing in the near future.

Frisco ISD has borrowed nearly $1.4 billion on the backs of taxpayers. And that doesn’t include interest, which is estimated at over $1.2

billion. Combine the principal and interest amounts owed, and the district’s total outstanding debt burden is nearly $2.6 billion, or about

$55,988 per student enrolled.

Among adjacent large districts, only Denton approaches this level of debt per student, at $41,671. Even then, Frisco’s total debt burden

per child is over $14,000 higher than Denton’s — and that, of course, doesn’t account for the $775 million of new debt.

Assuming a reasonable interest rate of 4 percent over 30 years, the interest owed on $775 million principal could be as much as $556

million. Adding this estimated new debt total of $1.3 billion to the existing debt total of $2.6 billion increases the district’s total debt to over

$3.9 billion. Under this scenario, the district’s total debt per student would be a whopping $84,781.

Frisco is expecting an additional 19,795 students to enroll between the current 2013-14 school year and the 2020-21 school year, and

these are the students that the bond’s capital improvements are intended to accommodate. The bond costs $67,289 per new student.

Not all of the money is going toward building new schools, however. Among other things, over $103 million is earmarked for a

combination of technology upgrades, vehicle purchases, surveillance cameras and conservation measures.

In other words, a portion of this debt is intended to pay for short-term expenses — something to avoid in public and personal finance.

Technology, in particular, has a notoriously short life cycle, needing upgrades every few years. Voters should be asking themselves

whether it is prudent to add debt in this way.

The short-run projects and the massive amount of total debt only come into clearer focus when you consider the effect on the tax rate and

Frisco’s bonding capacity.

Frisco ISD projects that when all bonds are issued by the 2020-21 school year, the interest and sinking (I&S), or debt service portion of

the tax rate, will be maxed out at $.50 per $100. In other words, after the bonds from this $775 million authorization are issued, Frisco

may not be able to issue any more for quite some time.

What will Frisco ISD do then, when they no longer have the bonding capacity to build truly needed capital projects?

Maxing out its bonding capacity and exploding its debt to close to $4 billion is not prudent fiscal management — and the effect on

taxpayers will be noticeable.

Rather than rubber-stamping the district’s $775 million bond package, Frisco taxpayers should demand that the district work within

existing budgetary constraints — just as Texas families do — and employ concepts like zero-based budgeting to help find efficiencies

that can be redirected to meet the district’s needs.

Adding a big pile of new debt to an already steep mountain of debt is not the right answer.

Jess Fields is a senior analyst with the Center for Local Governance at the Texas Public Policy Foundation, a nonprofit free-market

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Sharon Sykes 2 days ago

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Tracy Gamble 1 day ago


Tom 1 day ago


Tracy Gamble 22 hours ago


viper_76262 21 hours ago

Jess Fields is a senior analyst with the Center for Local Governance at the Texas Public Policy Foundation, a nonprofit free-market

research institute based in Austin. He may be reached at [email protected].

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He stated the current debt per student without the bond is $56k per student - and it is $14k higher than

any neighboring school district. Curious why that doesn't scare you?

It doesn't scare me because I understand the difference between debt and deficit. Frisco is

growing faster than, not just our neighboring school districts, but any district in the _country_.

We have literally been the fasting growing district for the last ten years. People are coming

because they want to live here and they like our schools. We don't get to opt out of educating

students (despite what some bond detractors have indicated they would prefer).

Frisco ISD has superior bond ratings from Standard & Poor and Moody's. We have won every

award you can get for fiscal responsibility, stewardship, accountability. FISD was 1 out of only 14

to receive the Platinum Award from the Texas Comptroller for responsible fiscal management --

out of 1038 districts in the state.

Yes, the bond number is high. But we need the schools, and we've proven that we can

responsibly manage the debt. There isn't an alternative that doesn't create overcrowding.

Tracy, sounds like you love the taxes, enjoy!

"Tom", do you live in Frisco ISD? Or are you just one more outsider trying to tell

FISD parents and voters how to live their lives? Just curious...

Tracy,

I have lived in Frisco since 2006 and am sick at what I

see the district doing. I have two children in the FISD and we moved

here for the long term. I will not have an oligarchy or politicians and

their cronies in the inner circle hijack this city and turn it into

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Joe Silk 1 day ago

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JulieB 1 day ago


viper_76262 21 hours ago

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harry balz jr 1 day ago


Tom 1 day ago

their cronies in the inner circle hijack this city and turn it into

Detroit.

Somehow that "free" public education is going to be $68K

per student while the administrators have that fancy new admin

building??

The days of disengaged voters is over. It is a mission of mine to

smoke these people out. Maybe you are one of these people?

viper_76262, if you live here, then you would know what your

actual tax bill from FISD is, yes? Therefore you know full well

that it is not actually $68K per student, thanks to our strong

corporate tax base and strategic booming growth.

I welcome your new participation as an engaged voter, and I

encourage you to investigate one of the city's fine civic

engagement programs like City Hall 101 or Leadership

Frisco, so you can learn about how government gets funded

and where our tax dollars go. Don't fall for the wild-eyed

rhetoric of people like Jess Fields and Matt Armstrong.

Watch out!!! Big money deals means big money payoffs and corruption opportunities.

Plus. Frisco has been reported to abuse free speech of protestors.

Vote no to taxes, always.

here is an idea.... FRISCO is big enough already... So stop all home building permits.. ESPECIALLY

APARTMENTS!!... then wait a few of years for the student population to level off.. After you get the

financials back in black (little AC/DC there), then the city should SLOWLY allow new construction.. but only

on new homes... no more apartments...

That's easy to say. First, understand that I'm not defending this bond program.

The Frisco ISD includes land in Plano, McKinney, and Little Elm. If that land isn't built out, Frisco

can't step in and beg them to stop building. We saw this happen in Plano when single-family

homes sprung up in former pastures and farmland in neighboring cities that were part of the

district. The east side of Plano was already near build-out at the time. It took years for the district

to catch up and get enough schools in place. I don't blame the PISD for that (though I have

problems with they way they managed the massive overcrowding in existing schools).

If I were moving to Frisco (or any high-growth city), I'd be very careful to look at the broader area

surrounding my home. If I had kids, and that land in nearby cities was undeveloped, I'd be wary

about potential overcrowding. If I didn't have kids (or sent them to private school), I'd still be wary

about property values in the event I had to sell up during a period when the schools were

overcrowded.

Frisco may be facing a similar dilemma. At the very least they can look to Plano and hopefully

avoid some of the mistakes made here in managing overcrowding in schools.

Julie,

The ISD can still buy the land now with $37MM. Nothing prevents that so your Plano

scenario will not happen in FISD.

We all know Frisco is growing by leaps and bounds but it's a HUGE

mistake to keep increasing our property taxes. Frisco ISD was part of

the brain trust that gave millions to Jerry Jones and now they want to

increase our taxes? Personally, I'd like to see the growth slow down as

it takes away from the value of living here. Who wants more traffic,

more people and higher taxes?

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Tom 1 day ago

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VK 22 hours ago

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Joe Palmer 1 day ago

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harry balz jr 1 day ago

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Michael 2 days ago

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Norton Rosenthal 18 hours ago

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VK 22 hours ago

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Samantha Geiring 20 hours ago

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Right Harry, wait until all the secret city council approved free taxes kick in for Jerruh Jones, along

with Exide, the people of Frisco are getting hosed. The city council must all ne Democrats with

their motto "everyone else's money, just not mine"!!!!!!!!!!!!!!

From what I read, all the funding for for this JJ venture is coming through sales taxes and from

Jones himself. If that's true, it's a pretty good deal for Frisco.

How much property tax will the city be collecting from Jerry Jones and the Dallas Cowboys?

BTW if you thought that all these new fancy office towers are going to help pay for FISD in a material

manner ... think again. Read this article from the DMN http://www.dallasnews.com/business/business-

headlines/20140426-tax-law-leads-to-towering-savings-for-big-building-owners.ece

"What will Frisco ISD do then, when they no longer have the bonding capacity to build truly needed capital

projects?" Like what?

Problem is, the article does not

pass the smell test. Frisco is growing,

and growth means providing public schools.

As Frisco’s population increases, the earnings and wealth of its

population increases, local spending increases, the economic base expands, reducing the impact of the

property taxes that

provide good schools and that help integrally to propel the community forward…

Personally, I think Frisco's education model is superior to the one HUGE high school concept of Allen or

some others. Class sizes are much smaller with neighborhood type schools and participation in extra-

curricular activities is greatly enhanced for every student.There's no free lunch for education and with the

state reducing funding at every opportunity, the taxpayers of Frisco will have to decide if they want to

maintain this excellence in education or not.

http://www.friscoisd.org/news/2013/08/13/cowboys-partnership

Not even a year ago ... "Frisco ISD will contribute $30 million to the project, or

1.2 million annually for 25 years. The money will come from an existing revenue

stream generated by a Tax Increment Financing District.

The City of Frisco will contribute $30 million; the Frisco

Economic Development Corporation, $30 million; and the Frisco Community

Development Corporation, $25 million. The Cowboys will be responsible for any

cost overruns.

“This is another example of how great things happen when

people come together to collaborate and partner for the good of the community,”

said FISD School Board President Renée Ehmke. “The economic impact of this

project will be phenomenal, but the varied experiences provided to our students

due to this partnership will be unparalleled. We could not be more excited.”

No

increase in property or sales tax rates for the FISD, City, FEDC or

FCDC is projected."

REALLY?????????????????????????????????????????????????? @Tracy Gamble @Sharon

Sykes @JulieB @Alvin Huerta @Jay Cutcher @VK @syndymelbourne @Joe Silk

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harry balz jr 12 hours ago

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Matt Armstrong 24 hours ago

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Matt Armstrong 1 day ago



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donsanedrin 19 hours ago

8 Months ago they approved the Cowboys Training Facility while most people were on vacation right

before school started. Conveniently, it made the newspaper Thursday and they voted on it on either

Monday or Tuesday if I recall correctly. At that time we heard ... "No increase in property or sales tax rates

for the FISD, City, FEDC or FCDC is projected." I didn't trust them then and I don't trust them now. I live

here and am tired of the taxation without appropriate representation.

Here's the link ... http://www.friscoisd.org/news/2013/08/13/cowboys-partnership

"Frisco ISD will contribute $30 million to the project, or 1.2 million

annually for 25 years. The money will come from an existing revenue

stream generated by a Tax Increment Financing District. The

City of Frisco will contribute $30 million; the Frisco Economic

Development Corporation, $30 million; and the Frisco Community

Development Corporation, $25 million. The Cowboys will be responsible

for any cost overruns.

“This is another example of how great

things happen when people come together to collaborate and partner for

the good of the community,” said FISD School Board President Renée

Ehmke. “The economic impact of this project will be phenomenal, but the

varied experiences provided to our students due to this partnership will

be unparalleled. We could not be more excited.”

No increase in property or sales tax rates for the FISD, City, FEDC or FCDC is projected." @Alvin

Huerta @Jay Cutcher @Joe Palmer @Joe Silk @John Classe @JulieB @Norton

Rosenthal @Sharon Sykes @Tracy Gamble @donsanedrin

Folks look around at WHO is making the personal attacks on this board, Tracy Gamble, who is a paid

consultant for the Special Interest PAC supporting the bond. (I work in politics and am a capitalist so not

at all against someone making money or even a living doing that, though I am strictly a volunteer (and a

donor) to our PAC. Attacking individuals personally is a progressive tactic, a la saul alinsky, instead of

touting the benefits of why this massive bond should pass overwhelmingly. It is very unbecoming! You

can learn more information about our group opposed to the bond at www.responsiblespend-

ingcoalition.org and we have videos up explaining our opposition and explaining why we believe people

should vote AGAINST this massive bond. We also have the campaign finance reports posted for all to

see, and the next one is due this Friday, and we encourage FISD to make them available, and for

everyone to see that our group has NOT taken on cent from anyone other than Frisco citizens, and their

group has taken HUGE money from Special Interests who stand to make 10's of millions of dollars off of

the building of elaborate school buildings.

Be sure to read and SHARE the article that was posted this morning about FISD. This is truly explosive

and shocking information that every voter needs to read and hear the audio / watch the video. From taking

Obama stimulus funds that add to the debt, to the MYSTERY of the missing elementary schools that

taxpayers have already paid for, to the misrepresentation of the way that Frisco ISD has used Gimmicky

Financing (Capital Appreciation Bonds) from Dr Lyon. (this audio begins at the 31:52 mark of the audio),

this is really a very disturbing article.

http://www.breitbart.com/Breitbart-Texas/2014/04/28/Frisco-ISD-to-Decide-on-Adopting-775m-Debt-I-

nitiative

Keep begging people to SHARE it, Matt. The only shares you've had on your Big Atomic Bomb on

FB appear to be from yourself and people who don't live in FISD or even DFW. You'd be wise to

start mitigating your losses at this point. Face the facts that Frisco ISD residents and voters just

aren't buying the snake oil you're selling.

This seems like a rather conservative argument, but it is presented in such a practical and logical way

that I agree with just about all of it.

There's a difference between investing quality money in schools, and just plain ole overspending. It

seems like Frisco had already overspent inefficiently on schools previous to this new bond.

For Frisco, its almost as if its a marketing tool to help attract higher class families to move to that town.

They probably have these huge expensive schools and fancy facilities.

They probably could afford the tax increase, given that the average household makes over six figures, but

those on the lower end will definitely be squeezed out. And if the estimate projections do not turn out to

be correct, then the existing Frisco residents will find themselves holding a very expensive sack of

potatoes.

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Alvin Huerta 23 hours ago



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Tracy Gamble 2 days ago


syndymelbourne 1 day ago


Wouldn't surprise me if those rich Frisco residents move on to the next trendy suburb, or even back within

the trendier parts of Dallas within the next 10 years. Who wants to be paying high county taxes when

they're children graduate?

FYI readers:

John Classe was a staunch supporter of putting Arts Hall

bond debt on Frisco tax payers backs and as Frisco’s representative on the Arts Hall board, he made a

pro-bond/hall vote in defiance of the wishes of the Frisco City Council. His wife serves on Frisco ISD’s

Bond Committee. By the way, everyone on that committee has much to answer for considering the

grossly inflated school construction costs presented. It appears to have been simply a “Yes” committee

stacked with minions. A REAL bond committee needs to be assembled before the horses get out of the

barn.

Classe raising the growth issue is just an expected diversion from the real issues of debt and excess.

Everybody knows Frisco is one of the fastest growing cities in the US and that new schools will be

needed. Duh! Opponents are simply calling for a more fiscally responsible package to be presented.

(Remember that name in case he tries to secure a seat on the City Council.)

Tracy Gamble is the domain registrar for the pro-bond PAC Frisco Schools First and their first campaign

finance report shows her receiving $4,000 as a "consultant". Not that there is anything wrong with that.

I'm just letting you know who you are hearing from.

I live in a sliver of Frisco in Lewisville ISD known as The

Swath. LISD just shot through $697.7 million in less than six years and more money is needed. It was

not spent even close to the original bond proposal. In part, they financed short-term assets (iPads) with

long term debt and it looks like FISD is set to do the same thing. Crazy! You can read about LISD’s bond

misdeeds at WeAreFrisco.org. (I am proud to be one of the founders.)

Frisco ISD voters: Be afraid. Be very afraid!

Alvin, thanks for the promotion! When WAF ("what a foul-up") and ITS tired angry rhetoric... and

the Frisco Tea Party and ITS tired angry rhetoric... get defeated yet again, my phone will ring

thanks to you and Matt constantly telling everyone everywhere how I'm the one consulting on

communications for the pro-bond PAC. With enemies like this, who needs advertising? (But no,

you don't get a sales commission.)

Oh look -- another misleading, fear-mongering opinion from the 25-year-old Austin special interest

mouthpiece who doesn't live in Frisco ISD, doesn't have children here, doesn't own a home here, doesn't

pay taxes here, can't even vote here. (But hey, he came to town a couple times! He knows what's best for

your schools.)

Magically, now the bond costs $67,289 per student. Of course that math is derived from the projected

NEW students... and they are refusing to account for the other ~45,000 kids already here. Nor are they

accounting for all the graduated kids whose parents still live here (and are still paying taxes into the

system).

Instead, the bond opponents want you to mistakenly believe that somehow, each *student* carries that

obligation. Which of course is false. It's like saying that my child in my house owes 1/3 of the mortgage

because she happens to live under the roof. SMH.

Just keep on throwing those big scary numbers at Frisco ISD residents. I look forward to watching the

number continue to climb; soon they'll be handing out flyers at gas stations saying debt per student is

ONE SCRILLION dollars.

Fortunately, Frisco ISD residents are smart enough to listen to the people we trust. And we also know the

difference between debt and deficit.

so b/c we dont live there

anything stated, any money from others outside Frisco is a not good??

REJECT THE BOND

SEC8 WILL RUIN YOU

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Tom 1 day ago

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Jay Cutcher 1 day ago


Slim Whitman 1 day ago

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Slim Whitman 1 day ago


Tracy Gamble 1 day ago

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John Classe 1 day ago


Matt Armstrong 24 hours ago



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Ha ha, betcha Frisco has minimal section 8.

You're fine with long term debt for short term expenditures??? That portion of the story is very

telling in itself and makes me question the whole package.

Jay,

I agree fully. That's a flashing red-light to me.

Tracy Gamble,

Good grief. No one thinks each student is responsible for his pro-rata share of district debt. It's a

way to quantify the amount of debt versus the size of the district.

No matter what you say or how you spin it as the piece above mentioned using long term debt

instruments to pay for short term obligations is a seriously bad move. Dying third world

governments do this. Argentina has done this two or three times right before their economy

collapsed each time I might add.

The $67,289 figure is the allocated bond cost per estimated new student by 2021. That's

information that clearly came from the district itself.

"It's a way to quantify the amount of debt versus the size of the district." - Yes, and our

district is the fastest-growing in the nation.

FISD has answered the short-term debt question a million times. See for

yourself. http://www.friscoisd.org/bond2014/faq#15

The short-term debt gets paid off first, but by rolling it into one package, they save on

fees from the financing. Additionally, paying for buses, etc within I&S frees up more

money in the M&O budget, which can be used for teacher salaries, curriculum, and the

like.

Wow… A lot of numbers to digest there. I will add a few of my own. Frisco ISD, my district, has

approximately 46,000 students presently and expects to add 20,000 more in the next SIX years. That is a

43% increase! Frisco ISD has over 50 campuses today. This bond proposition will pay for just 14 more.

14 more campuses to house a 43% increase in student population. Sure, these are big $ figures, but so

is the explosive growth we are experiencing. You encourage voters to vote no? Where do you propose

we house these students? Naysayers are really good at simplifying complex problems, but saying no

won’t solve them.

With all due respect John, you were also a big proponent of the Arts of Collin County, which

would have been a boondoggle had it not been voted down by the people. After that, when you

were appointed to the Board, you went against the wishes of those who appointed you, and the

people in Frisco who voted 52.7% against it in 2011, to keep it alive. Your wife was on the bond

review committee. Not sure you are the most objective observer here. Just sayin! P.S. I

appreciate you and your wife's service to the city, but we disagree on this one.

Matt -- tsk tsk. Another sad red herring from the leader of a tiny angry mob. Hey -- we

missed you at the Frisco Lakes brunch today. Your leader Tom Fabry crashed the

private event uninvited... why not you too?

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John Classe 22 hours ago

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Matt, we are certainly allowed to disagree. But my support for this proposition is no less

valid than yours just because my wife spent six months in committee vetting it. You

want to get things done in this town? Spend some time on the front end instead of

constantly saying "no" in the 11th hour. It's harder that way, but it gets results.

Finally, your accounting of my

service to the city is incorrect. I was, in fact, asked to stay on by our elected officials after

my term expired. Sound like an action that would have been taken if I "went against the

wishes of those who appointed" me? But feel free to continue diverting attention from

the matter at hand.

Unbelievable. Not 10 minutes ago, you whined and waved your hands in the air like a

little kid over on FB because I asked whether you had a student in the FISD school

district. So it's low for me to bring up something relevant about your family, but it's not

low for you to bring up the family member of another person when it suits your political

argument. Seriously, you are such a flaming hypocrite.

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why frisco isd’s $775 million bond is a bad deal for taxpayers · 4/29/2014 why frisco isd’s...

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