Midland Independent School District bond history (1947-2012)
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Bond history Finances Local ballot measures, Texas |
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The Midland Independent School District in Texas has put 38 bonds on the ballot between 1947 and 2012. A total of 31 were passed by voters. The bonds were used for new schools, renovations and additions to older buildings, maintenance projects, new technological infrastructure, and new athletic facilities.[1]
To get a bond on the ballot, the district's superintendent, board of trustees and chief financial officer work with auditors, bond counsel and financial advisors. Once a bond is drafted, the district must apply to the state's Permanent School Fund Guarantee Program, which guarantees all school district bonds in Texas. If the bond is approved by both the Texas Commissioner of Education and the Texas Comptroller, it can be put on the ballot for voter approval.[2]
Bond leadership
There are a number of people involved in Midland Independent School District's bond decisions. The Board of Trustees, superintendent and chief financial officer are all key leaders in bond development. Those district leaders then work with consultants. As of 2014, the district consulted with auditors from Weaver and Tidwell, LLP in Midland, had bond counsel courtesy of Andrews Kurth LLP in Austin, and used the First Southwest Company from Dallas as its financial advisor.[2][3]
District bonds
Between 1947 and 2012, 38 bond proposals for the Midland Independent School District have been on the ballot. Of those proposals, only seven did not receive enough votes to pass. Despite the high success rate, the district has found it harder to pass bonds in recent years.[1]
Between 1947 and 1974, every bond for the district was successful. Then, in 1979, the district's $10.2 million bond for Midland and Lee High Schools failed to pass with 61.98 percent of voters casting ballots against the measure. Between 1979 and 2012, another six proposals have been denied by voters, and those bonds that have been approved have seen smaller margins of victories. From 1980 to 2012, a total of 18 bonds have made it to the ballot, one-third of which failed to pass. Four of the bonds that did pass had over 40 percent of voters cast ballots against the measure, leaving just over half of voters in favor. The highest percent of votes cast in favor of a measure was 68.32 percent for the 1982 bond worth $9,475,000. A total of 17 bonds put to voters between 1948 and 1973 had a higher percentage of voters approve them.[1]
| Voter Approval and Dissent for Midland ISD Bond Projects, 1947-2012 |
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 The graph above displays the percentage of votes cast for and against each bond measure in Midland ISD between 1947 and 2012. One bond issue from 1965 is not included in the graph due to lack of information about the total number of votes cast against the measure. Positive percentages above the midline indicate the percentage of votes cast in favor of the measure; negative percentages below the midline indicate the percentage of votes cast against the measure. See the table below for more information about each bond question, the amount the question sought to approve and the raw total votes cast for and against each measure. |
| Midland ISD Bond Project Descriptions and Totals, 1947-2012 | ||||
|---|---|---|---|---|
| Year | Project | Amount | Votes for | Votes against |
| 1947 | Additions to Midland High School | $1,000,000 | 518 | 273 |
| 1948 | West, South Midland High Schools | $450,000 | 292 | 40 |
| 1949 | Crockett Elementary School, Carver Center | $450,000 | 385 | 23 |
| 1950 | Houston, DeZavala Elementary Schools | $300,000 | 234 | 14 |
| 1951 | Lamar Elementary, San Jacinto Junior High, Carver Center | $1,500,000 | 255 | 22 |
| 1952 | Travis Elementary School, Washington Math & Science Institute, Midland High School, DeZavala Elementary School | $975,000 | 353 | 23 |
| 1953 | Bowie Elementary School, San Jacinto Junior High | $450,000 | 257 | 63 |
| 1954 | Long and Milam Elementary Schools, Washington Math & Science Institute | $1,000,000 | 802 | 17 |
| 1955 | Austin Junior High, Midland High School | $2,000,000 | 593 | 45 |
| 1956 | Bonham, Burnet and Fannin Elementary Schools, Alamo Junior High | $3,500,000 | 625 | 183 |
| 1958 | Pease Communications & Technology Academy, Bunche Elementary School | $750,000 | 290 | 44 |
| 1959 | Lee High School, Henderson, Rusk and Jones Elementary Schools | $4,750,000 | 845 | 183 |
| 1964 | Gyms, Alamo Junior High | $300,000 | 1,262 | 44 |
| 1965 | Goddard Junior High, Edison and Emerson Elementary Schools | $3,050,000 | 1,357 | 251 |
| 1965 | Air for Midland High School, Carver Center | $450,000 | 1,273 | N/A |
| 1966 | Air for schools | $2,120,000 | 1,550 | 293 |
| 1973 | Continued air maintenance | $2,550,000 | 2,655 | 626 |
| 1973 | Multipurpose facility | $1,900,000 | 2,388 | 712 |
| 1974 | Air for schools | $4,200,000 | 3,393 | 2,210 |
| 1979 | Midland and Lee High Schools, others, vocational | $10,200,000 | 2,948 | 4,806 |
| 1980 | Major repairs, renovations | $3,000,000 | 8,062 | 5,457 |
| 1981 | Parker and DeZavala Elementary Schools, Midland and Lee High Schools | $5,600,000 & $1,000,000 | 3,131 | 2,369 |
| 1982 | Santa Rita and Scharbauer Elementary Schools, others | $9,475,000 | 3,422 | 1,587 |
| 1988 | Bush and 11 others | $11,800,000 | 4,091 | 2,219 |
| 1990 | Abell Junior High, Greathouse Elementary School | $24,495,000 | 3,329 | 1,587 |
| 1991 | Greathouse Elementary School, Coleman High School, others | $13,375,000 | 7,136 | 3,846 |
| 1991 | Abell Junior High | $10,840,000 | 7,058 | 3,883 |
| 1996 | Midland High School, two elementary schools, renovations, tech infrastructure | $110,000,000 | 6,291 | 7,974 |
| 1997 | Elementary renovations, tech infrastructure | $39,500,000 | 4,409 | 3,167 |
| 2000 | New Midland High School, Lee High School renovations | $72,200,000 | 6,219 | 14,263 |
| 2002 | Proposition 1: Secondary schools | $90,095,000 | 8,300 | 9,369 |
| 2002 | Proposition 2: Performing arts/athletics | $30,056,000 | 7,226 | 10,248 |
| 2002 | Proposition 3: Midland and Lee High School additions | $45,064,000 | 7,438 | 10,065 |
| 2003 | Proposition 1: Secondary | $67,100,000 | 9,830 | 5,397 |
| 2003 | Proposition 2: South Side Elementary | $8,800,000 | 7,112 | 7,901 |
| 2007 | Proposition 1: Improvement of elementary schools | $30,000,000 | 3,896 | 2,556 |
| 2007 | Proposition 2: Construction & renovation of athletic facilities | $7,160,000 | 3,567 | 2,887 |
| 2012 | Three new elementary schools and improvements on 24 campuses | $163,110,000 | 23,878 | 14,747 |
Credit rating
| Moody's Investor Service Global Long-Term Rating Scale | |
|---|---|
| Rating | Description from Moody's |
| Aaa | "Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk." |
| Aa | "Obligations rated Aa are judged to be of high quality and are subject to very low credit risk." |
| A | "Obligations rated A are judged to be upper-medium grade and are subject to low credit risk." |
| Baa | "Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics." |
| Ba | "Obligations rated Ba are judged to be speculative and are subject to substantial credit risk." |
| B | "Obligations rated B are considered speculative and are subject to high credit risk." |
| Caa | "Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk." |
| Ca | "Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest." |
| C | "Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest." |
| Source: Moody's Investor Services, "Rating Symbols and Definitions," March 2015 | |
On May 22, 2015, Moody's Investor Service rated Midland ISD's outlook as a bond issuer as stable. The credit rating company described the district, saying, "Although Moody's expects overall price softness in the oil and gas sector over the next three years, based on the financial resources of the district and the taxing capacity available, we believe the district will maintain stable operations in the event of a notable economic slowdown."[4]
The district's bond ratings, along with nine other local government issuers in the area, had been placed under review in February 2015. Moody's launched the review as the company "[believed] a combination of economic and financial factors make the [general obligation] ratings of these local governments particularly vulnerable to an extended period of low oil prices." Ultimately, the review did not alter the district's ratings.[5]
Moody's gave an underlying rating of Aa2 to bonds issued by Midland ISD from 2006 through 2014. The only rating category higher than Aa in Moody's rating system is Aaa. The rankings Aa through Caa can have the numbers 1 through 3 added to them to indicate their ranking within the general letter category.[3]
According to Moody's, "The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category." The table on the right displays Moody's description of its long-term obligations ratings.[3]
All of the bonds issued from 2006 through 2014, except for those in 2009, also received an enhanced rating of Aaa, the highest possible ranking. The debt guarantees provided by the Permanent School Fund Guarantee Program were cited for the enhanced rating in several cases.[6]
Permanent School Fund Guarantee Program
The Midland Independent School District is part of the Permanent School Fund Guarantee Program administered through the Texas Education Agency. Because of this program, all of the school district's bonds are backed by the state. This fact helped the district receive high credit ratings from Moody's Investor Services, Inc.[2]
In order to get a bond backed by the Permanent School Fund Guarantee Program, the school district must apply to the Texas Commissioner of Education. If the conditions of the bond are considered satisfactory by the Commissioner of Education, the Texas Attorney General must approve the program's guarantee of the bond. If the bond is approved, it will be guaranteed by the program until it is paid off, deceased or refunded.[2]
If a district defaults and needs funds from the program, the Commissioner of Education has to be notified no later than the fifth day before the payment is due. The Commissioner of Education will transfer the necessary funds to the school district. The Commissioner of Education will then work with the Texas Comptroller to ensure the amount given to the school district, plus interest, is withheld from the first state money payable to the school district in order to reimburse the program's funds. The Commissioner of Education can also order a school district to increase its tax rate in order to meet future payments or to reimburse the program.[2]
Program details
The Permanent School Fund Guarantee Program was set up through a voter-approved amendment to the Texas Constitution in 1983. The amendment allowed the Texas Permanent School Fund to provide the guarantee of school district bonds. As long as bonds are approved by the Texas Commissioner of Education, they are fully guaranteed by the Texas Permanent School Fund.[2]
The Permanent School Fund Guarantee Program backs bonds for both regular school districts and charter school districts. The program's capacity for funding is limited in two ways: by the state of Texas and by regulations from the Internal Revenue Service (IRS). As of 2014, the state's limit on the program was three times the cost value of the Texas Permanent School Fund, as long as that limit did not violate federal law. The Texas State Board of Education is required to annually review the program in order to determine whether its capacity should be changed. As of 2014, the IRS allowed the program to be five times as large as it was on December 16, 2009, which came to an estimated amount of $23.5 billion.[2]
Largest taxpayers
The top 10 largest taxpayers in the Midland Independent School District had a total taxable assessed valuation of $2,971,022,440 in the 2013-2014 fiscal year. A list of these taxpayers can be found in the table below. All 10 of the district's largest taxpayers are involved in the oil and gas industry. They "represent approximately 17.50% of the taxable assessed valuation of the District for the 2013/14 tax year," according to the district's official statement on its 2014 building bonds. The statement went on to say: "Oil and gas prices historically have been subject to fluctuation due to a multitude of factors. As a result, the District’s taxable assessed valuation and, therefore, the tax rates required to pay debt service on the District’s bonds, may be subject to volatility in future years."[2]
| Ten largest taxpayers[2] | |||
|---|---|---|---|
| Taxpayer | Nature of property | 2013-2014 taxable assessed valuation | % of total taxable assessed valuation |
| Pioneer Natural Resources | Oil and gas | $864,658,650 | 5.09% |
| Fasken Oil & Ranch LTD | Oil and gas | $519,953,420 | 3.06% |
| COG Operating LLC | Oil and gas | $316,124,850 | 1.86% |
| Chevron USA Inc. | Oil and gas | $299,710,560 | 1.77% |
| Endeavor Energy Resources LP | Oil and gas | $287,971,560 | 1.70% |
| OXY USA WTP LP | Oil and gas | $171,407,230 | 1.01% |
| Apache Corp | Oil and gas | $155,800,210 | 0.92% |
| Henry Resources LLC | Oil and gas | $134,506,420 | 0.79% |
| Fasken Land & Minerals LTD | Oil and gas | $110,998,850 | 0.65% |
| Basic Energy Services | Oil and gas | $109,890,690 | 0.65% |
Valuation and tax supported debt history
Midland ISD's tax debt per capita increased between 2012 and 2014, with the highest cost of $1,714 per capita occurring in 2014. Prior to 2012, the rate had been dropping, but voters approved a $163,110,000 bond measure that year.[2][7]
The district's estimated population grew 22.19 percent between 2010 and 2014. During that time, the taxable assessed valuation also increased. The outstanding debt increased as well, which drove up the district's tax debt per capita. In 2010, the ratio of tax debt to taxable assessed valuation was 1.2 percent. It fell to 0.97 percent in 2012 and increased to 1.41 percent in 2014.[2]
You can see the district's tax debt per capita trend in the chart to the right. The table below details the valuation and tax supported debt history for the district from 2010 to 2014.
| Valuation And Tax Supported Debt History, 2010-2014[2] | ||||||
|---|---|---|---|---|---|---|
| Fiscal year ending August 31 | Estimated population | Taxable Assessed Valuation | Taxable Assessed Valuation Per Capita | Tax Debt Outstanding at Fiscal Year End* | Ratio of Tax Debt to Taxable Assessed Valuation | Tax Debt Per Capita |
| 2010 | 108,940 | $10,221,439,879 | $93,826 | $122,650,725 | 1.20% | $1,126 |
| 2011 | 112,000 | $10,879,019,756 | $97,134 | $117,150,725 | 1.08% | $1,046 |
| 2012 | 129,655 | $11,235,065,718 | $86,654 | $108,685,730 | 0.97% | $838 |
| 2013 | 134,248 | $14,782,675,318 | $110,115 | $174,871,365 | 1.18% | $1,303 |
| 2014** | 140,000 | $16,977,225,006 | $121,266 | $239,926,214 | 1.41% | $1,714 |
| *The amounts of outstanding tax-supported debt shown in the table above include the principal amount of current interest bonds and capital appreciation bonds as of the issuance date thereof and exclude the accreted value of such outstanding capital appreciation bonds. **Fiscal year ending 2014 is as reported by the Midland Central Appraisal District on the District’s annual State Property Tax Reports. Such values are subject to change during the ensuing year. | ||||||
Tax supported debt service requirements
| Tax supported debt service requirements, 2014-2040[2] | ||||||||
|---|---|---|---|---|---|---|---|---|
| Fiscal year ending August 31 | Outstanding debt | The bonds* | Total debt service requirements | % of principal retired | ||||
| Principal | Interest | Total | Principal | Interest | Total | |||
| 2014 | $9,370,151 | $8,328,465 | $17,698,615 | - | - | - | $17,698,615 | |
| 2015 | $5,246,214 | $7,315,936 | $12,562,151 | $6,195,151 | $6,195,151 | - | $18,757,302 | 5.86% |
| 2016 | $5,670,000 | $6,827,854 | $12,497,854 | $1,005,000 | $4,153,625 | $5,158,625 | $17,656,479 | |
| 2017 | $5,865,000 | $6,639,449 | $12,504,449 | $1,035,000 | $4,123,025 | $5,158,025 | $17,662,474 | |
| 2018 | $6,075,000 | $6,427,013 | $12,502,013 | $1,070,000 | $4,086,100 | $5,156,100 | $17,658,113 | |
| 2019 | $6,320,000 | $6,183,194 | $12,503,194 | $1,115,000 | $4,042,400 | $5,157,400 | $17,660,594 | |
| 2020 | $6,600,000 | $5,904,181 | $12,504,181 | $1,165,000 | $3,990,975 | $5,155,975 | $17,660,156 | 20.27% |
| 2021 | $6,905,000 | $5,597,419 | $12,502,419 | $1,230,000 | $3,931,100 | $5,161,100 | $17,663,519 | |
| 2022 | $6,895,000 | $5,285,900 | $12,180,900 | $1,290,000 | $3,868,100 | $5,158,100 | $17,339,000 | |
| 2023 | $7,225,000 | $4,955,941 | $12,180,941 | $1,355,000 | $3,801,975 | $5,156,975 | $17,337,916 | |
| 2024 | $7,575,000 | $4,607,988 | $12,182,988 | $1,425,000 | $3,732,475 | $5,157,475 | $17,340,463 | |
| 2025 | $7,610,000 | $4,249,400 | $11,859,400 | $1,490,000 | $3,667,050 | $5,157,050 | $17,016,450 | 37.52% |
| 2026 | $7,985,000 | $3,873,606 | $11,858,606 | $1,550,000 | $3,606,250 | $5,156,250 | $17,014,856 | |
| 2027 | $8,385,000 | $3,478,456 | $11,863,456 | $1,620,000 | $3,534,750 | $5,154,750 | $17,018,206 | |
| 2028 | $8,815,000 | $3,049,425 | $11,864,425 | $1,705,000 | $3,451,625 | $5,156,625 | $17,021,050 | |
| 2029 | $8,555,000 | $2,615,175 | $11,170,175 | $1,790,000 | $3,364,250 | $5,154,250 | $16,324,425 | |
| 2030 | $8,990,000 | $2,176,550 | $11,166,550 | $1,885,000 | $3,272,375 | $5,157,375 | $16,323,925 | 58.09% |
| 2031 | $9,450,000 | $1,715,550 | $11,165,550 | $1,980,000 | $3,175,750 | $5,155,750 | $16,321,300 | |
| 2032 | $9,280,000 | $1,247,300 | $10,527,300 | $2,085,000 | $3,074,125 | $5,159,125 | $15,686,425 | |
| 2033 | $3,130,000 | $960,525 | $4,090,525 | $6,685,000 | $2,854,875 | $9,539,875 | $13,630,400 | |
| 2034 | $3,270,000 | $824,000 | $4,094,000 | $7,025,000 | $2,512,125 | $9,537,125 | $13,631,125 | |
| 2035 | $3,435,000 | $656,375 | $4,091,375 | $7,385,000 | $2,151,875 | $9,536,875 | $13,628,250 | 79.64% |
| 2036 | $3,615,000 | $480,125 | $4,095,125 | $7,765,000 | $1,773,125 | $9,538,125 | $13,633,250 | |
| 2037 | $3,800,000 | $294,750 | $4,094,750 | $8,160,000 | $1,375,000 | $9,535,000 | $13,629,750 | |
| 2038 | $3,995,000 | $99,875 | $4,094,875 | $8,580,000 | $956,500 | $9,536,500 | $13,631,375 | |
| 2039 | - | - | $9,020,000 | - | $516,500 | $9,536,500 | $9,536,500 | |
| 2040 | - | - | $5,820,000 | - | $145,500 | $5,965,500 | $5,965,500 | 100.00% |
| Total | $164,061,365 | $93,794,451 | $257,855,815 | $85,235,000 | $81,356,601 | $166,591,601 | $424,447,417 | |
Footnotes
- ↑ 1.0 1.1 1.2 Midland Independent School District, "Midland ISD Bond Elections as of 2013," accessed November 24, 2015
- ↑ 2.00 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09 2.10 2.11 2.12 Electronic Municipal Market Access, "Official Statement: $85,235,000 Midland Independent School District (Midland County, Texas) Unlimited Tax School Building Bonds, Series 2014," January 29, 2014
- ↑ 3.0 3.1 3.2 Moody's Investor Services, "Rating Symbols and Definitions," March 2015
- ↑ Moody's Investor Services, "Rating Action: Moody's confirms Midland ISD, TX's GOULT rating of Aa2; outlook is stable," May 22, 2015
- ↑ Moody's Investor Services, "Rating Action: Moody's places 10 Permian Basin and Eagle Ford local government credits under review for downgrade," February 25, 2015
- ↑ Moody's Investor Services, "Midland Independent School District, TX," accessed July 23, 2015
- ↑ Midland Reporter-Telegram, "Midlanders pass largest bond in city’s history," November 6, 2012
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