Voters approved a HISD bond back in 2012. Municipal bond rates have significantly dropped between 2012 and now (https://www.munibondadvisor.com/market.htm) which affords an opportunity for HISD to refinance the bonds to achieve cost savings. Additionally, refinancing the bonds via a new bond issuance gives the district to address the criticisms the outside audit identified with the last bond issuance.
The district has run a budget deficit for six budget years now, counting this budget cycle. The debt service has been in deficit for all six years. In the three most current budgets the debt service figures are as follows:
Year Interest Deficit
2019-20 139.2 MM 52.7 MM
2020-21 127.1 MM 48.1 MM
2021-22 122.7 MM 26.3 MM
The average municipal bond interest rate in 2012 was a tick under 3.75% and was 2.26% on September 30th. For simplicity's sake let's use 3.75 and 2.25 which is a 40% reduction in bond interest rate. Using this 40% reduction would have realized the following savings and deficit on the three most current budgets as follows:
Year Interest Deficit
2019-20 83.5 MM 3.0 MM surplus
2020-21 76.2 MM 2.8 MM surplus
2021-22 73.6 MM 22.8 MM surplus
This simple action changes the I&S portion of the budget from deficit to surplus.
The outside audit of the 2012 bond issue was critical of HISD. To be fair to the board, some of the criticism was for issues outside the board's control, and the board had justification for why some of the recommendations were inappropriate. However, some of the criticism is for activity within the board's control and would need to be addressed before the reissuance of a bond. This is a good opportunity to implement new best practices before the next new bond becomes necessary.
Refinancing the bonds is a good opportunity to implement new best practices before the next new bond becomes necessary. It also gives a pathway forward to fund needed repairs and renovations without having to issue new bonds. When elected trustee I will push to have the bonds refinanced at the current lower rates so the debt service goes from deficit to surplus and have a more secure financial future at HISD.
Thank you for reading and thank you for your support.