In recent weeks, Spring Branch ISD has sold construction bonds at historically low interest rates. At the same time, the district has received more bids on upcoming projects, resulting in lower costs. For SBISD, it’s a good time to rebuild.

In November 2007, Spring Branch ISD voters approved a $597 million bond to fund an ambitious plan to rebuild 12 of the district’s oldest elementary schools, improve and upgrade building systems, construct new classrooms, and upgrade transportation, athletic facilities, safety and security systems, and technology.

With favorable market conditions, the district today is able to rebuild schools at lower cost and borrow funds for bond projects at historically low, long-term interest rates. At this time, SBISD has a unique opportunity to accelerate its building program, thereby maximizing cost savings and efficiency, taking advantage of a competitive construction climate, and protecting tax dollars to hedge against future inflation.

For a Spring Branch homeowner, the school budget and taxes have two parts. One component is the General Fund, which is the primary operating budget of the district and includes expenditures for utilities, fuel and salaries for staff and teachers. The levy that supports these annual outlays is the General Fund Tax Rate. In 2009, this tax rate is $1.09 per $100 of assessed valuation.

The second component, the Debt Services Fund, covers expenses associated with the bond, or debt principal, and interest. In 2007, district voters authorized an increase in the Debt Service Tax Rate to pay principal and interest annually on new bonds. In 2009, this rate rose 1.2 cents to 0.3045 per $100 of assessed valuation, reflecting the full amount of the tax rate estimated when voters approved the bond issue.

In October 2009, SBISD finalized the sale of $125 million in bonds with a true interest rate of 3.88 percent, reflecting the best rate environment for the district in a quarter century, according to bond financial advisors. This low rate is a hedge against future inflation.

In addition, SBISD saved $12.9 million in future interest expense through this strategic sale of a 50-50 mix of traditional tax-exempt bonds and new, federally subsidized Build America Bonds.

At the same time, significant project cost savings are occurring across SBISD. Within the past year, bids on four campus projects involving extensive systems upgrades drew more bidders than originally anticipated. These projects at three elementary schools and at Landrum Middle School were from 20 to 30 percent under budget.

Meanwhile, a summer 2010 project to build a classroom addition at Bunker Hill Elementary School attracted 22 contractors – double or more the normal bidders. Project bids there were substantially lower than anticipated.

Savings realized through multiple project bids, bond sales or other reductions in costs or efficiencies will be applied to the district’s Bond Contingency Fund. Several district committees estimated facility improvement needs totaling more than $800 million before the 2007 bond plan was approved by voters.

Like a homeowner’s mortgage, bonds provide the funds for SBISD to build new schools and facilities. District voters authorized an increase in our debt service tax rate to pay the principal and interest annually on new bonds. The debt service tax rate rose 1.2 cents this year, reflecting the full amount of the tax rate estimated when voters approved the bond issue.

For the owner of a $200,000 home in Spring Branch qualifying for the full 20 percent homestead exemption, estimated school taxes this year will be about $2,002, or $17 more than last year. SBISD continues to maintain one of the lowest local property tax rates for a public school district. It remains one of the few school districts to grant optional homestead exemption at a full 20 percent.

Spring Branch is building for the future – prudently and wisely!