HPISD consistently considers efficiencies to improve current budget conditions and to ensure the district is financially sound.  Since the Texas school funding formula requires a significant portion of Maintenance & Operations (M&O) tax collections to be sent to the state as recapture ($107M paid in recapture by HPISD in 2022-23), and 85% of the District’s budget is already allocated to salaries, there are limited options to realize significant savings.  However, there is constant focus to ensure that the District is responsible stewards of taxpayer dollars and that administration reduces expenditures where possible.

The Golden Pennies election in November 2021, along with support from HPEF Mad for Plaid, PTAs, PTOs, Dads Club, and other support organizations, has provided a significant boost to the HPISD budget and has been instrumental in allowing significant salary increases over the past three years to make teacher salaries more competitive with area districts,  Additionally, District leadership has been proactive to ensure operational efficiencies are realized, available fund balances are invested at the highest possible interest rates while ensuring safety of principal, and staffing levels are aligned with enrollment levels.  Additionally, the growth of the Pre-School program has provided additional funds for the District and increased student enrollment.

Since salaries are 85% of the operating budget, most efforts to cut costs or find spending efficiencies have been focused on being efficient with staffing levels.  It is difficult to cut measurable costs from the final 15% of the budget, since that portion includes instructional supplies, software, utilities, insurance, property tax collections fees, legal and audit services, maintenance contracted services, extracurricular transportation, etc.  However, every effort has been made to be efficient in those expenditures.

The District has also heightened its focus on finding alternative revenue sources, including investment earnings, athletic gate ticket sales, facility rental income, and Pre-School program growth revenues.  As discussed prior, the proposed bond will provide the District with significant opportunities to reduce budgeted expenditures and maximize spending efficiencies.

As of October 2, 2024, the Bond Buyer 20 General Obligation Bond Index for municipal bonds is 3.81%. While rates have fluctuated during the last 15 years, today’s rates are similar to rates during the 2015 bond and are lower than they have been 77% of the time since 1961. Since municipal bonds provide tax-free income and HPISD is AAA-rated, the interest rates available for new municipal bonds is significantly lower than homeowner mortgage rates.

All projects in the bond have estimated useful lives of somewhere between 3 and 30+ years.  The debt will be structured with various maturities, all of which will be less than or equal to the useful life of the assets.  There will be no debt amount that has a maturity beyond the useful life of the asset it is supporting.  

HPISD has an “Aaa” underlying rating from Moody’s Investors Service, the highest rating available.  HPISD is one of only three districts in Texas with a Moody’s “Aaa” rating.  Additionally, HPISD has an “AA+” rating from Fitch Ratings, which is based on Fitch’s expectation that the “District will maintain superior financial resilience through a typical economic downturn, underpinned by its sound expenditure flexibility, moderate carrying costs, and a low long-term liability burden.” 

Additionally, HPISD had an audited general fund balance of $35,325,252 as of fiscal year-end 2023.  The fund balance represented 5.37 months of operating expenditures, which is above the five months of fund balance recommended for July 1 fiscal year districts.

Overall, HPISD is in a financially strong and healthy position.

There are over 1,000 public school districts in Texas. Highland Park ISD is one of only three public school districts in the state to earn the highest bond ratings Aaa/AAA by two major ratings agencies. This allows the district to receive better interest rates for borrowing and paying bond debt back sooner. 

Voter approval is simply an authorization for the District to sell bonds. The bonds are sold in the future only when the funds are needed. The Board of Trustees will have to take action to authorize each bond sale after approval of a bond referendum. Capital improvements and budgetary items are made public and will be reviewed and approved by the Board before implementation

The May 2015 Bond was very successful from a financial standpoint. All projects in the bond were completed timely and under budget. The bond included the demolition and reconstruction of Bradfield, Hyer, and University Park elementary campuses, major renovations and additions to Armstrong Elementary, and the addition of Boone Elementary. In addition, the projects included major renovations and additions to both MS-MIS and HPHS, as well the construction of the Clements Leadership Center, and renovations/maintenance upgrades to Highlander Stadium. 

The District has been able to increase teacher salaries by over 15% in the last 4 years, without receiving additional funding from the state. This is due in large part to the Golden Pennies election in 2021 and support from the HPEF Mad for Plaid, PTAs, PTOs, Dads Club, and other organizations. The District has also increased fund balances, refinanced old debt, and retired debt early, which has saved millions of dollars in interest. The District has also implemented new ELA, math, and science curriculums and seen increases in STAAR scores and student achievement.

HPISD enrollment peaked in 2014-15 at 7,091 students and was 6,437 in the most recent 2023-24 school year.  Since the 2016-17 school year, annual Kindergarten classes have been about 100 students less each year than graduating Senior classes.  That trend is expected to continue through 2028-29. Enrollment is currently projected to level out at approximately 6,000 students in the 2029-30 school year and beyond. 

There are several possible reasons for declining enrollment, including a general decline in births across the United States since 2008, families having fewer children than prior generations, and the barrier for young families to live in the Park Cities due to the cost of home ownership, among other factors. 

Ensuring that we continue to invest in HPISD is one possible way to stem the enrollment decline.  Additionally, the District is focusing on providing a high-quality Pre-School option for Pre-K age students which is anticipated to help with mitigating the current enrollment decline trend.

The November 2024 Bond is not about enrollment or student capacity needs.  Instead, the primary goals are to ensure our current facilities are maintained at high levels, to capitalize allowable expenditures to free up dollars for increased staff salaries, to provide land for future facilities development, and to ensure we are providing our current students with the best programs and opportunities for their overall educational development.

During the November 2015 bond assessment, the district did consider the possibility that enrollment would not meet growth projections.  Historically, the District’s growth had met or exceeded demographers’ moderate growth projections.  Therefore, the District believed that planning for the forecasted growth was the more prudent course of action, and not planning for it would be much riskier.  If the district did not plan for the projected growth and it happened, the existing problems would be compounded and the future solution would be much more expensive.  If the district planned for growth and it did not happen, then the schools would have extra capacity of about one extra classroom per grade level, which could be used for other purposes such as grade level libraries, offices, etc.  It is common for schools not to operate at 100% capacity at all times.

HPISD issues its municipal bond debt in serial bonds with maturities ranging from 1-20 years to ensure that principal amounts are paid off before the end of the useful life of the respective assets being financed. If voters approve Bond 2024, preliminary projections indicate that approximately $7M of the bond projects have a useful life of 5 years, but the District will pay off over $36M of principal in the first 5 years of the debt cycle. By year 10, over $59M of debt principal will be retired, and the entire $137.3M of debt will be retired within 20 years of issuance.

The most recent tax rate impact analysis from the District’s financial advisors assumes a 6% taxable assessed values growth in tax year 2025, then 4% during the years 2026-2028, and no taxable assessed values growth for any year going forward. Based on those assumptions, HPISD has capacity to service all current debt, plus the additional $137.3M of debt from Bond 2024, and still retire all debt within 20 years of issuance at the current $0.17 I&S tax rate.