What is a bond?
A bond is similar to a home mortgage. It is a contract to repay borrowed money with interest over time. Bonds are sold by a school district to competing lenders to raise funds to pay for the costs of construction, renovations, and equipment. Most school districts in Texas use bonds to finance renovations and new facilities.
What is a bond election?
School districts are required by state law to ask voters for permission to sell bonds to investors in order to raise the capital dollars required for projects such as renovation to existing buildings or building a new school. Essentially, the voters are giving permission for the District to take out a loan and pay that loan back over an extended period of time, much like a family takes out a mortgage loan for their home. A school board calls a bond election so voters can decide whether or not they want to pay for proposed facility projects.
How can bond funds be used?
Bond funds can be used to pay for new buildings, additions, and renovations to existing facilities, land acquisition, technology infrastructure, and equipment for new or existing buildings. Bonds cannot be used for salaries or operating costs such as utility bills, supplies, building maintenance, fuel, and insurance.
Exactly how much was the 2017 bond package?
Voters in Little Elm ISD authorized a bond amount of $239,500,000 on November 7, 2017.
What does it mean to “authorize” $239.5 million?
By calling a bond election, Little Elm ISD asked voters to give the District authorization (or permission) to sell bonds up to $239.5 million, which is planned to take place over a number of years. The District is limited by the amount of bonds it can sell by bonding capacity. Bonding capacity is the amount of debt a District's debt service (I&S) revenue can service. The District's financial practice is to only incur debt to accommodate growth and other capital improvement projects.
How was the bond package developed?
The Little Elm ISD Long-Range Facilities Planning Committee reviewed and prioritized District needs relating to student population growth, building age, safety and conditions, and evolving educational deliveries and program needs. The Committee represented a broad cross section of the community, including parents, community constituents, and campus and district staff.
The committee met six times and made a recommendation to the Board of Trustees on June 19, 2017.
What is the anticipated schedule for the bond releases? For example, PROP A $235M BOND. First release expected in Q1 2018 $50M, Q2 2018 $50M, etc.?
The amount and timing of the bond sale will be determined by variables such and interest rates, timing of the projects, and construction costs.
The District works closely with a financial advisor to determine various bond sales scenarios.