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Texas Schools Are Stuffed to the Max as Voters Reject Bond Sales
(Bloomberg) -- As superintendent of a Texas school district that’s projected to gain almost 4,000 students in the next five years, Scott Muri says his district is desperate for more classroom space.
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The schools he leads in Ector County are bursting with kids, many buildings are more than a half-century old and residents keep flooding in, lured by the bustling industry and cheaper real estate of West Texas. Yet, in May, voters rejected two bond proposals totaling $398 million to build new facilities and update existing ones – forcing at least another year of cramped classrooms at a time when construction and borrowing costs have surged, making much needed improvements more expensive.
“We don’t put things out to the voters that are on the wishlist, we ask them for what we need,” Muri said in an interview. The residents of the Ector County Independent School District, which includes Odessa, voted against the measures that would have built a new high school, career center and funded construction upgrades including plumbing, mechanical, and fire safety improvements.
“We’ve used every nook and cranny in the school and converted them to classrooms, but we’ve run out of space,” Muri said.
Before a slight decline in enrollment caused by the coronavirus pandemic, Ector County ISD added about 4,200 students from 2012 through the 2019-2020 school year, according to figures provided by a district spokesperson.
There are more than 1,000 public school districts in Texas and the ones that are growing the fastest generally are clustered around the suburbs of the major metropolitan areas of Austin, Dallas, Houston and San Antonio, according to the Fast Growth School Coalition, an organization that represents rapidly expanding school districts in the state. The coalition defines fast growth districts as those having enrollment of at least 2,500 students and growth of 10% or more over the last five years, or a net increase in enrollment of 3,500 or more students.
Fewer Bond Approvals
One fast-growth district outside of Dallas is expecting student enrollment to surge around 50% in the next eight years, said Georgeanne Warnock, superintendent at Terrell Independent School District. She said that by 2026, it will be out of seats for elementary school students.
But it has been increasingly difficult for districts to win voter support for their bond proposals, which are crucial in helping them raise funding needed to build new schools. This year, just 63% of the $16.7 billion in bond measures on ballots in May were approved statewide, according to data from the Texas Bond Review Board. That’s compared to roughly 81% on average in the past decade.
School bond measures also failed in other states this year. Voters in Hoboken, New Jersey, rejected a $241 million referendum for a new high school, and a $263 million proposal in Chester County, South Carolina, to upgrade schools was stymied by residents.
“The broader economic picture definitely contributed,” Warnock said, talking about voters rejecting her district’s $95 million ballot measure, which would have funded a new elementary school, safety and security upgrades and other improvements. “People are feeling insecure about inflation and rising costs.” And even in low-tax Texas -- where there’s no state income tax-- the property levies hit hard, especially as home values surged, she said.
The district plans to go back to voters until its measures are approved, fully expecting the price to go up as inflation causes construction and material costs to skyrocket.
“The cheapest time to build a school was yesterday,” Warnock said. The district is already considering raising the bond measure to $110 million in the next election cycle to account for higher costs.
Five of the 10 fastest growing counties in the US are in Texas, according to Census data. And with a population surge often comes a construction boom. The Lone Star State has the nation’s biggest school district debt market, with more than $134 billion of bonds sold in the last decade, according to data compiled by Bloomberg.
In terms of quality of education, Texas ranked No.35 nationally in a U.S. News & World Report review of state education systems, which focused on measuring how well students are prepared for college. New Jersey was first in the nation, while New Mexico ranked last. The state ranks above average in public high school graduation rates, with 91% of freshman graduating with a diploma in four years, according to the most recent data from National Center for Education Statistics.
A ‘Wild Ride’
For Forney Independent School District, a fast-growth district outside of Dallas, the construction can’t keep up with the explosive growth. Nearly 1,600 students were added to the system in the last year and enrollment is expected to more than double to about 35,000 students in 2031, according to a district demographic report.
Voters approved a $1.3 billion bond measure this spring. Meanwhile, plans are underway to erect three, 12-classroom pop-up facilities next to the high school while it waits for an addition to be finished, said John Chase, the district’s chief financial officer.
“It’s been a wild ride,” he said in an interview. “When you go through explosive growth that is a challenge on the infrastructure, no question.”
Across Texas, public school enrollment has increased 1% in the last school year, while jumping 8.6% the past decade, according to data from the Texas Education Agency. Texas’s school age population jumped nearly 28% between 2000 and 2020, far outpacing the broader US’s growth of 0.6%, the report said. Texas Governor Greg Abbott touted the population growth in a tweet this month, saying it’s “younger and faster” than the nation.
‘Pent Up Needs’
But the population boom isn’t universal across Texas schools. The district servicing Austin, for example, expects to lose about 4,000 students over the next five years and enrollment in Alief ISD, a lower-income district near Houston, has dropped by more than 5,000 students in the past two years.
The Texas districts’ experience is reflected in cities around the country, including Chicago, New York and Los Angeles. During the pandemic, city residents decamped to the suburbs in search of more space and affordable housing. And many parents opted to home-school their younger children, particularly those in pre-K, kindergarten and first grade, according to Bob Templeton, vice president at Zonda Education, which provides demographic analysis for more than a hundred school districts across the south-central US.
But even districts that are losing students have construction and infrastructure needs, said Nicole Conley, a municipal bond banker at Siebert Williams Shank & Co., LLC, and former chief financial officer for Austin ISD.
“There are so many pent up needs,” Conley said, citing everything from older buildings that need renovation to coronavirus-related HVAC system updates to new safety and security features to fortify schools against increasing threats.
Read More: Austin Weighs $2 Billion Bond for School Safety, Teacher Housing
The development boom in many suburban and exurban metro areas has put additional strain on many school districts. In the Dallas-Fort Worth metroplex, for example, enrollment in the Northwest ISD, about 20 miles north of Fort Worth, has increased by more than 10,000 students in the past decade. Demographers are projecting an additional 22,000 students in the next 10 years.
The driving force is strong job creation and new home builds.
“That naturally is creating a surge in families with kids,” Templeton said.
The Humble Independent School District north of Houston is experiencing “extreme growth,” Superintendent Elizabeth Fagen said in an interview. The district has been adding about 1,000 students a year, a number that ballooned to about 2,800 in the last school year, she said.
Physical space is the biggest challenge, she said. The district plans to open a new middle school in the fall and is working on additions to two high schools to accommodate the surge in students. District voters approved a $775 million bond measure in May to finance school construction and technology upgrades. The first part of those bonds were sold in the capital markets this week, underwritten by Jefferies Financial Group Inc.
Fagen said that if voters didn’t approve the bonding, she wouldn’t have been able to give school employees a 4% raise because the district would have had to spend the money on temporary buildings to house students.
“It’s not a choice to not educate the children,” she said. “If you don’t have the bond dollars to handle the one-time cost of the growth, you have to use your general operating budget.”
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