This commentary originally appeared in the Houston Chronicle on February 2, 2015.
Texas public schools are adrift in a sea of red ink.
The latest figures from the Bond Review Board reveal that all local debt in Texas – consisting of debt held by cities, counties, school districts and special districts – stands at more than $333 billion. Of that, school district debt makes up the largest share, amounting to about one-third of the whole.
In terms of the dollar amount owed, public school debt totaled a whopping $112.2 billion in fiscal 2014, an increase of more than $4 billion from the prior year. The per student debt burden – a figure rarely paid any attention by those advocating for more public school spending-comes to more than $21,850 owed for each of the state's 5.1 million students. Of course, some school districts' owe even more than that.
In Cypress-Fairbanks Independent School District, the state's third-largest public school district, local taxpayers are on the hook for $2.9 billion or $25,933 owed per student. In San Antonio's Northside ISD, the district has amassed debts of almost $3.2 billion, totaling $31,414 owed per student. And in Frisco ISD, situated about 30 miles north of Dallas, local residents owe a staggering $2.8 billion or $62,003 per pupil.
To be fair, voters bear some responsibility for Texas' emerging local debt crisis as they have approved most school bond proposals over the years. But with the system rigged against the taxpayer – thanks to "rolling polling," the absence of pertinent financial information at the ballot box, the (mis)use of voter surveys to test messaging, and not requiring separate and distinct ballot propositions – it's little wonder that local debt has become a major problem. And if past trends are any indicator, it'll likely to get worse still.
From 2001 to 2011, school district debt soared by more than 155 percent, according to the Texas Comptroller's October 2012 report, "Your Money and Education Debt." That exceeded student enrollment growth, 26.5 percent, and inflation increases, 21 percent, by a factor of more than 3-to-1.
There's no denying it: Texas public school districts have an unhealthy addiction to debt and some strong medicine is needed. Fortunately, some positive policy prescriptions appear to be on the horizon.
Though the 84th legislative session is still relatively new, several promising bills are already working their way through the process.
Some of these bills, such as Senate Bill 102 and House Bill 134, would arm voters at the ballot box with basic financial information about bond proposals. Right now, Texans are provided with very little information inside the voting booth, often leading to ill-informed decisions on hugely expensive projects. The proposed bills seek to change this by providing voters with necessary information, such as the total cost of the bond, the amount of existing debt carried by the entity asking for more, and the anticipated tax impact.
Other bills, like Senate Bill 103, would ban capital appreciation bonds, which are exotic public-financing devices that allows a governing body to defer the payment of principal and interest until the bond matures, sometimes as many as 40 years after the bond has been issued. School districts in particular have relied heavily on these types of bonds because it allows them to bypass existing debt limits and incur obligations that future taxpayers, many of whom aren't even born yet, will have to contend with.
Another bill that has not yet been filed but may soon be is a proposal to restrict the practice of "rolling polling," a technique used by school districts to move polling locations during early voting in order to target certain voting populations and discourage general turnout. Not surprisingly, this widespread practice can suppress voters that might otherwise be opposed to a school district's bond proposal.
With reforms like these and others, Texans can begin to get a handle on the rising tide of red ink at the school district level before it swamps the state and jeopardizes the Texas model of economic freedom and prosperity.
James Quintero is director of the Center for Local Governance at the Texas Public Policy Foundation, a nonprofit, free-market research institute based in Austin.