Dallas Independent School District will ask voters for the largest bond issue in Texas history during one of its greatest periods of uncertainty.
The $3.7 billion proposal is designed to help remedy a legacy of racism that left many areas of Dallas underserved and neglected.
During a special board meeting in June, the Dallas ISD Board of Trustees unanimously approved a resolution affirming its commitment to black students and black lives in the wake of widespread protests over the May 25 killing of George Floyd by a Minneapolis police officer.
“We have to move beyond incremental steps,” said Justin Henry, board president. “When something is at a crisis as it is now and has been since I was a child and before then, we have to look toward more systemic and deep change. We have to develop a higher level of urgency.”
Development of the bond proposal came as the COVID-19 pandemic spread through Texas and the country, pushing classes online with no guidance on when schools would reopen.
“We are in a time of uncertainty, but what we know is that we need these schools to be modernized,” DISD Superintendent Michael Hinojosa said in a town hall on May 13. “The cost of interest rates being so low, here’s a great opportunity to get authorization. And we can adjust going forward.”
The bonds would be issued over a decade bearing 30-year maturities, officials said.
Chief Financial Officer Dwayne Thompson told the town hall that the district was keeping affordability in mind, projecting conservative property value growth and knowing that interest rates would affect issuance.
“We may have to revise our sales structure, as far as the dollar amount, but we wouldn’t propose anything to the board that would put us over the proposed tax rate,” Thompson said.
On July 14, DISD priced $278 million of bonds maturing through 2050 at a true interest cost of 2.0013% through Wells Fargo Securities.
The district’s underlying ratings of Aa1 from Moody’s Investors Service and AA-plus from S&P Global Ratings and Fitch Ratings are enhanced to triple-A with the Texas Permanent School Fund Guarantee.
The district has $2.4 billion in outstanding unlimited tax bonds and $143 million of tax maintenance notes.
“Fitch anticipates the property taxes and state aid that support district operations will continue to grow at a pace above inflation but below U.S. GDP,” analysts said in a June 18 ratings report. “This assumption is based on expectations of continued taxable assessed value expansion, a generally flat to modestly declining enrollment base, and the likelihood of further increases in per pupil state funding levels.”
Dallas ISD serves a population of 1.1 million in the city of Dallas and all or portions of 11 area cities and towns. The district's population growth of about 11% since 2010 exceeds the U.S., but falls slightly below that of the state. Student enrollment totaled approximately 155,120 in fiscal 2019 which was a roughly 1% decline over fiscal 2018. Texas’ largest urban districts have seen enrollment declines in recent years, but the dramatic impact of the pandemic was not anticipated.
Fitch is assumes sharp economic contractions to hit major economies in the first half of the year "at a speed and depth that is unprecedented since World War II.” “Sequential recovery is projected to begin from 3Q20 onward as the health crisis subsides after a short but severe global recession. GDP is projected to remain below its 4Q19 level until mid-2022.”
Since Gov. Greg Abbott’s March 31 order for public school districts statewide, DISD has moved to online teaching. Even as Abbott directed a gradual reopening of the state's economy beginning in late April, all Texas K-12 school and college campuses remained closed through the 2019-2020 school year.
Dallas County health officials announced Thursday that all public and private schools in the county must keep their classrooms closed through Sept. 7, according to a press release from Dallas County Health and Human Services.
The Texas Education Agency initially said all schools must offer in-person instruction for all students who want it this fall, allowing districts a transition period of just three weeks at the start of the year to hold classes virtually and get safety plans in place. It didn’t take long for them to rethink the initial approach, as COVID-19 cases, hospitalizations and deaths continue to surge across the state.
“School systems will now be able to temporarily limit access to on-campus instruction for the first four weeks of school,” the TEA said in a press release Friday.
“After the first four weeks, a school system can continue to limit access to on-campus instruction for an additional four weeks, if needed, with a board-approved waiver request to TEA,” the release said.
“Despite what will be a challenging budget year, Gov. Greg Abbott, Lt. Governor Dan Patrick, Speaker Dennis Bonnen, and other legislative leaders are committed to fully funding in-class and remote instruction for every child in the upcoming school year,” TEA Commissioner Mike Morath said.
DISD’s bond proposal would come on the Nov. 3 ballot, which would include the presidential race and statewide race for the U.S. Senate. With polls showing a strong anti-Republican trend, support for a bond election built on racial equity could have a chance of passage, even if it proposes a record amount of debt, school officials reason.
The bond proposal includes four “neighborhood hubs” where the district would invest $10 million for public services. The hubs would be built around formerly segregated high schools in neighborhoods that were once redlined by banks, meaning home loans were not available because residents were predominantly African-American. The practice begun in the 1930s by the federal government did not end until passage of the 1968 Fair Housing Act.
During segregation, only the white schools were named for Confederate leaders. The black schools in Dallas were named for Abraham Lincoln, Franklin Roosevelt, and civil rights leaders such as Booker T. Washington.
In recent years, DISD has stripped the names of Confederate generals from public schools, a trend that has gained momentum around the state. The city of Dallas has also removed statues and monuments honoring the Confederacy and renamed parks and other facilities.
