Taxpayers Skeptical of Frisco ISD’s Tax Rate and Debt Proposals

Taxpayers in Frisco Independent School District are skeptical of their school board’s plans to borrow and spend hundreds of millions of dollars while lowering the tax rate dedicated to debt repayment, and they’re asking tough questions ahead of the district’s November bond and tax rate election.

FISD taxpayers want to know why they should support a huge spending plan with no accountability, and how the district expects to repay more debt while collecting less debt service tax revenue. They also want to know what’s changed in the two years since the district’s last tax ratification election (TRE) failed by a wide margin, after citizens organized against passage of the 13-cent property tax increase.

Several things have changed, says Frisco City Councilmember Will Sowell, who also represents the Frisco Residents for Public Education PAC. Sowell spoke on behalf of the bond proposition and TRE at two meetings hosted by the Frisco Tea Party.

For one, said Sowell, there’s a new superintendent (though Mike Waldrip isn’t new to FISD’s central administration) and new district leadership. “We have a different board president with a different vision,” he added. Sowell said he believes over the past two years there’s been a recognition by district officials that they need to improve transparency and accountability to residents.

Residents remain skeptical. It’s a matter of trust, said taxpayers at Monday night’s forum, something district officials’ past actions and current proposals have failed to inspire.

Frisco ISD wants voters to approve $691 million in new tax-funded debt, not including interest. That’s on top of $3.26 billion in debt principal plus interest taxpayers owed as of 2017 — about $54,000 per student — all of which must be repaid with property taxes.

The borrowed money would be spent to “finance the construction of new schools, renovations to existing facilities, security measures and more” through the end of the 2025-26 school year, according to FISD’s bond and TRE website.

FISD currently has 60,000 students enrolled across 72 campuses. Sowell said student enrollment is projected to top 71,000 by 2026. But a resident noted the projections show enrollment growth slowing over that time, from 3.5 to 1.5 percent annually, while the city’s tax base is growing by 6 percent excluding commercial development.

Residents questioned Sowell on the need to spend school tax revenue on proposed projects like a $43 million performing arts center, $2 million apiece to astroturf baseball fields, or thousands of high-tech security cameras inside schools. But the bond proposition’s vague language means none of the money has to be spent as proposed. “How can you support a bond that has zero accountability?” one taxpayer asked.

Sowell said he supports the entire bond package. “I think there is a substantial need that’s not being met today,” he said, adding that fine arts parents expect arts facilities to be on par with athletics facilities. “Parents in Frisco ISD have high expectations.”

At the same time district officials want taxpayers to take on a mountain of new debt, they want voters to ratify a property tax rate that takes in significantly less revenue for debt repayment, while raising the tax burden that funds school operations to the maximum allowed by state law.

The school board’s proposed tax rate “swap and drop” would raise the maintenance and operations (M&O) tax rate by 13 cents and reduce the debt service (I&S) rate by 15 cents. The result would be a two-cent drop in FISD’s overall tax rate for 2018, to $1.44 per $100 of assessed taxable value.

In fact, taxpayers will receive a two-cent drop in their overall tax rate whether the tax swap passes or fails, as the board voted in August to cut the I&S rate from $0.42 to $0.40. Frisco Tea Party Treasurer Tom Fabry believes the TRE vote should focus on the merits of the major M&O increase.

The tax swap would raise the operations portion of the rate from $1.04 to $1.17 — the maximum allowed by state law. Voter approval through a TRE is required for a school district to raise its M&O tax rate above $1.04. If the TRE passes, the higher M&O rate will continue annually going forward. The district’s operating budget for 2018-19 is $515 million; more than 80 percent of that goes to payroll.

The debt repayment portion of the rate would drop to $0.27 for 2018 if the TRE passes; otherwise, it will be set at $0.40. Authorization to raise the debt service rate in future years is included in the bond vote; no other voter approval will be required to raise the I&S rate, which is set by the board each year.

Taxpayers at Monday’s Frisco Tea Party forum questioned why district officials asked for the maximum-allowed operating rate when the district is already running a huge surplus.

Attendees also said they believe a 15-cent reduction in the debt service rate is financially unsound and the district will have to raid the fund balance and other accounts to make up the difference — a temporary fix. Questioned about the likelihood of the board raising the I&S rate in the future, Sowell responded “there’s no elected official in Frisco that wants to raise taxes.”

Fabry noted that past school board candidates were ridiculed for suggesting even a small I&S reduction; now the board wants a big I&S rate drop to sell the M&O hike as a tax cut. “There’s not 15 cents there,” Fabry said. He pointed out the board’s own presentation shows the district doesn’t collect enough under this plan in the first two years to cover the rate drop.

Yet at the current I&S rate, the district is over-taxing residents. The board is legally required not to collect more than needed, Fabry added. If the TRE doesn’t pass, the board has a fiduciary responsibility to return surplus to the taxpayers; an I&S rate decrease shouldn’t be contingent on an M&O increase.

Fabry also reminded Sowell that when the 2016 TRE was proposed, the district predicted dire consequences if the tax hike didn’t pass. But in reality, teachers got raises 30 days before the TRE was voted on, and every year afterwards. This year, Fabry said, they were all given bonuses to help buy down the surplus. The district also built four schools that didn’t open, he added — not because there wasn’t money to fund them, but because there weren’t students to go to them.

Sowell said there is a better accountability plan in place now than before. Will it be enough to persuade voters to trust the district with more property tax dollars?

Frisco ISD voters will need to carefully assess the pros and cons of both proposals before casting an informed vote. To participate in the November 6 election, voters must register by October 9. Early voting begins October 22.

Questions about the bond and TRE can be directed to Will Sowell of Frisco Residents for Public Education PAC at [email protected] and Tom Fabry of Frisco Tea Party at [email protected].

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Erin Anderson

Erin Anderson is the Metroplex Correspondent for Empower Texans & Texas Scorecard, reporting on state and local issues, events, and government actions that impact people in communities throughout the area. A native Texan, Erin grew up in the Houston area and now lives in Collin County.

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