The following is the sixth in a series of questions being presented about the upcoming DeLeon ISD bond issue that will be on the May 12 ballot. The response for the question is provided by Dr. Randy Mohundro, Superintendent of Schools for DISD.

Question -- “Why can't this school construction project be put off for a few years down the road when our local economy has had time to get better?”

The first reason that waiting is not in the best interest of the district is cost of the project. Each year that the district waits to do this project will likely cost the district approximately $1 million in additional cost that will have to be added to accomplish what is now being proposed. That means that instead of doing work on every campus for all of the students of the district, waiting will mean that some students will not get the same benefits as others.

The reason that we know that cost are going up is to look back at the history of school construction over the last ten years. In 1997 a building constructed similar to what is being proposed now was costing approximately $62 a square foot. This cost included all fees that are associated with school construction. In 2003, that same building was costing $90 a square foot to build. In budgeting the current project the district has used $125 a square foot. In ten years the cost to build a school building has doubled.

The reason for this cost increase is due to several reasons. First, of course, is inflation. Just as it has hit everything that must be done in the course of business, inflation has also hit the area of school construction.
Another reason that school construction costs have increased is due to the increase in the number of building codes that have now come into existence that must be followed. New requirements have come in about the area of air quality, energy conservation, and building standards that have pushed construction costs up. On the horizon are more new building codes that will require buildings to become even more energy efficient and meet new standards for “green” buildings. All of these requirements will push the cost of building schools even higher, and may increase subsequent operating costs as well.

The other cause for the rising costs that has to be acknowledged is the increased demand for building materials. The world economy is moving at a rate that is causing the building materials market to see pressure that has caused prices to rise sharply. While some people will blame the hurricanes of 2005 others say that the building boom that is being seen in the far east in India and China is the factor, the result has been a constant rising of prices for the materials used to build schools.

Unfortunately, once the cost of construction goes up, it does not go down.

The State of Texas has also recently given school districts a unique opportunity. For the first time in the history of public education in Texas, school districts have the opportunity to actually lower their total tax rate and, at the same time, issue debt for the purpose of constructing schools. The compression of the local tax rate allows a tax payer to see their total school tax rate decreased, compared to the rate that was adopted by the school board in the previous year.

Why does this matter? The importance of this is that a local property owner will not see an increase in their school tax bill for the coming school year when compared to the rate that was charged this previous year. Typically, when a school district passes a bond issue, the local taxpayer will see an increase in their school property tax bill. This time, however the taxpayer will not experience an increase in additional out of pocket expense for the students of the district to have improved school facilities. What a taxpayer is paying is what they will have to pay, and with the tax rate actually being decreased by $0.0325, they should see a lower tax bill.

The other reason that now is the time is due to the state funding that will be available. The State of Texas and its Existing Debt Allotment means that the state will pay 43% of the district’s annual bond payment. The only way that the district can access these funds is to issue debt.

If the district does not have debt that can be enrolled with this program, those state monies will be to another district.

The amount of money that is being made available is significant. Rather the district having an annual bond payment of $615,000, the district would only be paying $382,000. The state would be contributing $238,000 each year for the life of the bond.

Why would DeLeon leave this kind of money on the table?

Another way to think about it is that rather than having to pay $125 per square foot, the district would only have to pay $66.25 per square foot.

No additional out-of-pocket for the local taxpayer, and the State of Texas being a major player in paying for school facilities in DeLeon, makes this the time to seize the opportunity before the cost of construction makes these projects no longer a realistic posibility for the students of DeLeon ISD.