Major problem emerges with $807 million CISD bond maintenance expenditures

CISD’s proposed $807 million bond package violates the Texas Education Code.

Conroe, February 24 – After yesterday’s news report about the Conroe Independent School District’s (CISD) violation of Section 45.001 of the Texas Education Code by including maintenance expenditure items in the bloated $807 million bond package and tax hike, which CISD voters will face in the May 4, 2019, election, a legislative expert, who requested anonymity, brought another major legal problem with the bond package to the attention of The Golden Hammer, Montgomery County’s leading daily newspaper. Yesterday’s article was “Conroe ISD’s Proposed $807 Million School Bond Includes Approximately $131 Million In (Illegal) Maintenance,” The Golden Hammer, February 23, 2019.

The legislative expert informed this newspaper, “Take a look at Section 45.108 of the Education Code to further your point on maintenance and operation expenses. The CISD’s use of debt service for maintenance and operations is prohibited in many forms, but more simply because the district already charges a tax rate for maintenance and operations. Debt service taxes can’t be used for those purposes even if paying off bonds used outside of the bounds.”

Section 45.108 of the Texas Education Code provides (with emphasis added):

(a) Independent or consolidated school districts may borrow money for the purpose of paying maintenance expenses and may evidence those loans with negotiable or nonnegotiable notes, except that the loans may not at any time exceed 75 percent of the previous year’s income.  The notes may be payable from and secured by a lien on and pledge of any available funds of the district, including proceeds of a maintenance tax.  The term “maintenance expenses” or “maintenance expenditures” as used in this section means any lawful expenditure of the school district other than payment of principal of and interest on bonds.  The term includes expenditures relating to notes issued to refund notes previously issued under this section if the refunding notes are coterminous with the refunded obligation.  The term also includes all costs incurred in connection with environmental cleanup and asbestos cleanup and removal programs implemented by school districts or in connection with the maintenance, repair, rehabilitation, or replacement of heating, air conditioning, water, sanitation, roofing, flooring, electric, or other building systems of existing school properties.  Notes issued pursuant to this section may be issued to mature in not more than 20 years from their date.  Notes issued for a term longer than one year must be treated as “debt” as defined in Section 26.012, Tax Code.

(b) Notes may be issued under this section only after a budget has been adopted for the current school year.

(c) Notes issued under this section must be authorized by resolution adopted by a majority vote of the board of trustees, signed by the president or vice president and attested by the secretary of the board.

(d) A note issued under this section may contain a certification that it is issued pursuant to and in compliance with this section and pursuant to a resolution adopted by the board of trustees.  The certification is sufficient evidence that the note is a valid obligation of the district.

CISD’s Chief Financial Office admitted that the bond debt for the $807 million bond package will have a 25-year maturity. Therefore, the inclusion of maintenance expenses in the proposed bond is a direct violation of Section 45.108(a) of the Education Code, which limits the maturity of such debt to 20 years.

More significantly, however, what the more than $131 million of maintenance expenses in the $807 million bond package reveal to voters is the enormous deleterious impact to the children, parents, and all taxpayers from CISD’s terrible management practices which have placed bloated administration salaries ahead of education, teacher salaries, and facilities maintenance.

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