Challenger in school board race targets pay-later bonds

Apr 8, 2013 by

The Leander school district’s use of a controversial pay-later method of borrowing to accommodate its explosive growth has become a key issue in the district’s lone school board race.

Jim MacKay, challenging school board President Pam Waggoner for the Place 3 seat, says the district needs to get its debt — $1.3 billion in outstanding bonds — under control.

“We’re going to hit that tipping point where living in Leander or Cedar Park is not going to be attractive. Then all that growth they’re counting on to pay back this debt isn’t going to happen,” said MacKay, who is backed by Tom Pauken, the former Texas Workforce Commission chairman who is running for governor in 2014.

The district has taken out $773 million in capital appreciation bonds and attracted the attention of state lawmakers who have authored bills that would ban the use of the bonds by school districts and other municipalities. Capital appreciation bonds allow borrowers to delay making payments for years or decades while the interest grows to as much as 10 times the amount borrowed.

Districts in fast-growing areas argue that they have no choice but to use the bonds because state law caps the amount a district may collect in taxes to pay off debt at 50 cents per $100 of assessed property value. Capital appreciation bonds are the only way for them to keep building schools without busting the 50-cent cap, they say.

Waggoner, who has served on the board for nine years, said she spent most of Tuesday at the Capitol asking lawmakers to change the 50-cent cap. Waggoner said it’s not enough to pressure school boards to avoid the bonds without changing state law.

“We are strapped by the 50-cent cap. Everything we do is to stay under that 50-cent cap,” Waggoner said. “It’s really a legislative issue; it’s not a school board issue.”

The district in the past two years refinanced a portion of its capital appreciation bond debt to save more than $47 million over the life of the bonds. Last week, district trustees approved refinancing more, a move estimated to save an additional $79 million.

MacKay said he was disappointed to see the district discuss borrowing an additional $172 million in capital appreciation bonds at the same meeting.

Waggoner, who runs an insurance company and has two children in the district, said refinancing is not the only way the board has worked in recent years to save money. She said her expertise helped identify ways the district could save money on its insurance policies.

Waggoner said her focus as a board member has been on providing a “world-class education that is economical to the taxpayer.” She cites the district’s inclusion of club sports on a contract basis — allowing club sports teams, such as lacrosse, to use school mascots and operate essentially as a school team — as another accomplishment.

“It’s another outlet to allow kids to belong to their schools,” Waggoner said. She has been endorsed by district teachers, parents and Vic Villarreal, an Austin Community College board member and former Leander City Council member.

MacKay, who works for a defense contractor and is a firefighter with the Texas Air National Guard, said the district’s debt is not its only problem. MacKay, who also works as the announcer at Vista Ridge High School football games, said bullying is a problem that district officials are not doing enough to prevent.

MacKay said the district also needs to improve its communication with the public.

“If we had open and honest communication, all of those problems would solve themselves,” MacKay said.

via Challenger in school board race targets pay-later bonds |

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