In 2007, the voters of the Paint Rock Independent School District narrowly approved a school construction bond valued at $2,624,998.20 to build a new cafeteria, gymnasium, classrooms, etc. on the Paint Rock ISD campus. The bond increased the local property Interest and Sinking (I&S) taxes by 27 cents per hundred dollar valuation. The first payment on the bond was to take place in 2008 and the last payment thirty years later in 2038. In May of 2009, the “new gym and cafeteria” opened for the first ever public event held in the new facility…. the graduation of the Class of 2009.
In 2015, the PRISD School Board of Trustees voted to take advantage of the district’s improved financial position and lower interest rates by refinancing the 2007 school bond. The district was able to refinance most of its bond debt, but not all of it because of financial and legal arrangements regarding the original bond. The refinanced bond was for $2,159,999.15. Refinancing the bond resulted in a $250,000.00 savings to the district and local taxpayers over the life of the bond. It also resulted in the bond payoff schedule being changed. The refinanced bond is scheduled to be paid off completely in 2036, two years ahead of schedule. Each year that the bond is paid off early means that the district and local tax payers save money. It also means that local property taxes will decline dramatically.
The I&S tax rate is currently 27 cents per hundred dollar property valuation. When the bond is paid off the district’s tax rate will be lowered by 27 cent per hundred dollar property valuation. A $100,000.00 home without homestead or other exemptions would see a $270.00 yearly decline in their property taxes after the I&S bond is paid in full. The sooner the bond is paid off, the cheaper the overall cost of the bond and the sooner district tax rates can be lowered.
With the expanding/contracting nature of local property tax valuations and the lower interest rates, some years PRISD takes in more funds than needed to make that years I&S tax payment. This is permitted under state law and has been approved by the elected members of the school board. Those extra funds were used to help refinance the bond in 2015. Since then, the district has used them and other I&S (bond) funds to make payments on the refinanced bond and pay off the parts of the original 2007 bond that they were not able to refinance in 2015. The bonds that could not be refinanced in 2015 were paid in full in 2018. This was done ahead of schedule and at a savings to the district and the tax payers.
Paying off the bond debt sooner saves the district and the tax payers more money throughout the life of the bond. The next time that the district can make an extra payment or refinance the bond is in 2025. PRISD has placed the excess I&S funds in separate interest bearing accounts and CDs at the local bank where the funds will continue to grow. In 2025, these funds and any other excess I&S funds that the district accumulates in the years to come will be used to make a significant additional payment or refinancing of the bond debt. Presently, there are enough funds in these I&S accounts to shorten the payoff of the bond debt by at least two more years… four years ahead of schedule.
What was once a voter approved school bond debt that was not scheduled to be paid off until 2038, can now be paid off four years earlier in 2034 saving the district and tax payers money. If these kind of sound financial practices are allowed to continue, the bond could possibly be paid back many years before its time, saving money for the district and the local tax payers. And as soon as the bond is paid back, local property taxes in PRISD will be reduced by 27 cents per $100 valuation.