DALLAS — The $63.6 billion of outstanding debt from local school districts in Texas at the end of fiscal 2011 accounts for a third of the $192.7 billion of outstanding local debt in the state, Comptroller Susan Combs said in a comprehensive report on education finances.
Community and junior college districts had $4.3 billion of outstanding debt in fiscal 2011, the report said, while the outstanding debt of public four-year colleges and universities in Texas totaled $12.5 billion.
The report on education debt issued late last week is the third in a four-part series on debt transparency from the Comptroller’s Office.
Previous reports focused on property-tax debt and state and local debt. A report on public pension plans will complete the series.
The 155.2% increase in school district debt over the past 10 years outpaced enrollment growth in Texas public schools and the inflation rate, Combs said.
“Educating young Texans is crucial to the state’s continued economic success, but we must also ensure costs do not over-burden Texas taxpayers and families,” Combs said.
Ten large or rapidly growing suburban districts accounted for 23% of the total school debt, with 854 of the 1,024 school districts in the state reporting some outstanding bond debt.
The 10 largest districts had $15.74 billion of outstanding debt.
Dallas Independent School District, the second largest district in Texas, had $2.62 billion of outstanding debt at the end of fiscal 2011. Houston Independent School District, the largest school district in the state, had $2.45 billion outstanding.
Debt service by local school districts totaled $5.3 billion in fiscal 2011, up 126.5% from $2.4 billion in fiscal 2001.
In response to the education debt report, the Texas Association of School Boards rejected the contention that school district debt is excessive. School district bond programs are developed by the elected trustees and district officials, and approved by local voters, TASB said.
“That argument ignores the role of such expenses in preparing future generations for the future, and the cited statistics fail to capture the unique nature of school district debt,” the TASB said.
Most school debt is issued for facilities that can be serviceable for decades, it said, and serve many students over the lifetime of the bonds and beyond.
“This is an important distinction since it captures the use of the facility after the bonds have been paid,” TASB said.
School and college districts should put information on the ballot outlining the existing debt and how adding new debt will affect the property tax rate when asking for additional funding, Combs said.
“Taxpayers are not always aware of the magnitude of the debt being issued and the potential additional costs to taxpayers, college students, and their families,” she said.
Lawmakers should consider a review of debt issued for non-instructional facilities such as football stadiums, Combs said, while providing incentives for districts to use cost-effective design and construction practices.
“Public education is a critically important function of the state, and taxpayer dollars should always be spent prudently,” said Combs. “Construction costs are a large portion of school debt and we should all strive to spend efficiently and effectively.”
