The Big AISD Question That Nobody Is Asking

By Bill Oakey – November 30, 2017

The question seemed so obvious that I never imagined it wouldn’t be asked. AISD just approved the sale of 8 district properties for a grand total of  $64.8 million. And they approved the purchase of a new site for their headquarters for $28.4 million. That leaves the school district with a cool $36.4 million in extra cash.

I read about this in several news articles, waiting anxiously for the answer to the obvious question. The one that for some odd reason was never asked…

What Are They Going to Do With All That Money??

Austin voters just passed a whopping $1.1 billion AISD bond proposition, by far the largest in history. The mailers in the bond campaign never mentioned the price tag. But they prominently featured a highly misleading statement – “AISD will not raise  the tax rate if the bonds are approved.”

Most citizens are painfully aware that the tax rate has to DECREASE each year to offset skyrocketing home appraisals. So, a carefully crafted promise not to raise the rate leaves plenty of wiggle room for higher taxes on everybody. This lack of disclosure must be a loophole in the 1987 Truth In Taxation law that I proposed and successfully got passed in the Texas Legislative.

I realize that my concerns beg the question of whether AISD needs more money to repair and replace dilapidated facilities. Of course they do. And the root of the problem is the Robin Hood funding formulas that force AISD to send more money back to the State than any other school district in Texas.

To me, that is all the more reason that AISD should handle their finances responsibly. Back in the 1980’s I humorously referred to their board as the Board of Mistrustees of the Austin Inefficient School District. Back then, they consistently had the highest per student costs in 8 out of 11 categories among the largest districts in the state.

While I was standing in line to vote in the recent billion dollar bond election, I heard a disturbing comment from an AISD employee. These were his exact words:

”You wouldn’t believe how much money the administrators spend traveling to all kinds of conferences! That would be enough money to give the teachers a pay raise.” That sounds like a great tip for one of the TV stations to use for an investigation. (Hi there, KXAN…). In any case, we certainly need some immediate disclosure on how the AISD board plans to use that nice chunk of change from the land sales. What is their process for determining such a thing? Here are a few suggestions:

1. Pass the savings on, directly to property taxpayers. (Not likely).

2. Evaluate options based on best practices used by other school districts across the country.

3. Research methods to refinance existing debt.

4. Increase reserves to raise their bond rating and earn the resulting benefits.

We might be able to assume that they are doing some of those things, or possibly something even better. But whatever they decide, they should let the taxpayers know about it as soon as possible…Oh gosh…My apologies for not mentioning the most likely option for AISD to consider. There must be a perfect conference in Brazil or on the French Riviera that would address all of these unanswered questions!

While composing this blog piece, I sat in the Magnolia Cafe on Lake Austin Blvd., surrounded by young AISD students enjoying a nice breakfast. Today is some kind of teacher training day. It was fun to observe the little poignant love scenes in some of the booths. It was like something straight out of “Grease,” “The Breakfast Club,” or “American Graffiti.” These kids will grow up in a very uncertain world. We should wish them all the best of good fortune and happiness.

Update – Response From Melissa Taboada, Austin American-Statesman

Melissa Taboada’s latest article about the land sales can be viewed here. She was kind enough to email me some additional details she has learned about this topic. But many questions still remain. She wrote:

Hi Bill,

The district needs to make the Southfield building compatible to its needs. At Monday night’s board meeting, the district outlined the new central office building could cost $37-$50 million with those changes. In the story, I mentioned that remaining funds from the CAC would go toward the new administration building. The bond projects also total $1.3 billion and to bring the cost down to the $1.1 billion, the district said it will use bond contingency funds, as well as $40 million in land sales.

Hope this information helps,

Melissa Taboada

My Analysis of These Additional Details

Melissa is well-versed on many details, having attended all of the AISD board meetings. However, let’s take a close look at these numbers…

$64.8 Million – Total land sales from 8 properties
$50.0 Million – $28.4 M purchase price + $21.6 M high estimate to refurbish Southfield Bldg.
$14.8 Million – Leftover money from land sales, using high-end building estimate

$64.8 Million – Total land sales from 8 properties
$37.0 Million – $28.4 M purchase price + $8.6 M low estimate to refurbish Southfield Bldg.
$27.8 Million – Leftover money from land sales, using low-end building estimate

These calculations tell us that after fully funding their new headquarters building, AISD will have somewhere between $14.8 and $27.8 million left over for other purposes. These amounts don’t fit very well with AISD’s plan to use bond contingency funds “plus $40 million in land sales” to reduce the cost of the bond projects from $1.3 billion down to the $1.1 billion that appeared on the election ballot. Unless I’m missing some more details, there appears to be a gap of missing money here…

$40 Million – Land sales funds needed to reduce bond projects from $1.3 billion to $1.1 billion
$14.8 Million to $27.8 Million – Land sales available after fully funding Southfield Building
$12.2 Million to $25.2 Million – Apparent funding gap

The gap doesn’t look too bad until you factor in the likelihood of cost overruns for refurbishing the Southfield Building to make it “compatible with AISD’s needs.” Cost overruns tend to spring up on just about everything these days. And the “needs” of AISD’s executives may not be quite the same thing as the taxpayers’ needs. Thanks to all of you readers for bravely wading through the weeds with me on this issue.

Update From Nicole Conley Johnson, AISD Chief Financial Officer

Nicole Conley Johnson

2017/11/30 at 9:21 pm

Good day Bill. I am Nicole Conley Johnson, the CFO of AISD. The subsequent analysis that you’ve done regarding the purchase and rehabilitation of the Southfield site is spot on. There is still a gap to get to the $40 million from land sales. It is anticipated that there could be more properties sold as the bond program is implemented. As it is implemented, several school site could become available for future sales. For example, Rosedale after its rebuilt on the Lucy Read site and/or the proposed school unifications.

Let’s Not Overlook the Elephant(s) In the Room!

Here are two final, very critical questions:

  1. How do the prices on each of the 8 properties that AISD plans to sell, and the purchase price of the Southfield Building compare to the appraised values on TCAD’s official tax rolls?
  2. What are the detailed specifications that AISD has laid out for the refurbishment of the Southfield Building? The cost estimates range from $8.6 million to $21.6 million. Let’s assume that AISD strives to use our tax money just as prudently as Austin families have been forced to do with their own budgets under today’s affordability constraints. Can we get a commitment from AISD’s top brass that they will stick as close as possible to the low-end estimate for their new digs?  And can we get a commitment that they will publish a press release beforehand, telling us exactly what we are getting for that amount of money? (This calls for one new song to be added to the music list below).

Musical Accompaniment for This Blog Piece:

  1. “Such An Easy Question” – Elvis Presley
  2. “96 Tears” – Question Mark and the Mysterians
  3. “Hey Schoolgirl” – Tom and Jerry (before they changed their name to Simon & Garfunkel)
  4. “To Sir With Love” – Lulu
  5. “Wonderful World” – Sam Cooke, or the cover version by Herman’s Hermits
  6. “Commitment” – Leann Rimes
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5 thoughts on “The Big AISD Question That Nobody Is Asking

  1. Court Thieleman

    Rather than just banging your head in your blog on this subject, you should go ahead and forward this to KXAN (as you referenced in your post) and request that they investigate AISD expenses such as those that AISD employee mentioned.

    Reply
  2. Nicole Conley Johnson

    Good day Bill. I am Nicole Conley Johnson, the CFO of AISD. The subsequent analysis that you’ve done regarding the purchase and rehabilitation of the Southfield site is spot on. There is still a gap to get to the $40 million from land sales. It is anticipated that there could be more properties sold as the bond program is implemented. As it is implemented, several school site could become available for future sales. For example, Rosedale after its rebuilt on the Lucy Read site and/or the proposed school unifications.

    Reply
  3. Nicole Conley Johnson

    I will work on the analysis and get back to you. I know for the CAC site, the proceeds from the sale exceed the appraised value by $10 million but I would need to verify the other six sites. Please know that the sales will hopefully generate new commercial property tax revenue that could offset some of the burden on residential payers since AISD doesn’t pay taxes on the seven sites. I refer to seven sites because AISD reached agreement with the City to transfer the development rights on the Travis Country site to increase capacity on overcrowded schools in the Barton Springs Zone. That site will be used for parkland.
    We don’t have any of the space planning or specs developed for the new site. We are in the beginning stages of assessing the building. We do know that the new property was significantly cheaper than fixing the current deficiencies at CAC and Baker at a cost of $37.1 million and $16.9 million respectively. And as we move forward with rehabilitation plans for the new site, we will certainly be transparent on the costs as the Board will need to publicly approve any contracts over $100k. Since it’s class B office space, we are already seeking more cost-effective solutions. I think if you look at and other governmental entities and/or Urban school districts, you will see a stark contrast in the kind of headquarters they maintain as opposed to current AISD or the class “B” in our future.

    Reply

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