Guest Post by David Derry, VP of Texas Farm Credit
More fake news out there that is making the rounds.
I know many “conservatives” think that Texas Scorecard is an unbiased source for news, but just like any news service you must vet the information based on your own knowledge, common sense and other sources.
Vance Ginn is the economist that came up with these figures. He is a paid consultant for several anti-public education groups and groups that are pushing ESAs/vouchers which profit some large companies that hope to be able to earn millions by administering such a program in Texas.
● How Vance arrives at this number is to first consolidate figures across all ISDs in Texas.
● Second he takes the M&O (maintenance & operations) taxes, adds the I&S taxes (interest & sinking – debt service) and then adds the outstanding principal of all bonded indebtedness per total students in Texas to arrive at his $50,000 figure.
I would guess that Vance either knows this is incorrect and is intentionally misleading people in hopes that Texans don’t do their own research or he is ignorant of how this works.
● First of all, you cannot aggregate these figures across all ISDs (Independent School District) since each ISD has vastly different levels of bonded indebtedness from $0 to $100s of millions. You can’t take the debt of Allen ISD and equate it with that of Medina ISD.
● Second, the state controls the M&O tax rate and basically tells the ISD what this is to be.
This is also subject to what is called recapture (taking tax money from one district and giving it to another). M&O taxes are where the state gets the money to provide the basic allotment to schools.
Your tax dollars go to Austin and they give the school back a portion of those. M&O taxes are what are used to fund the schools ongoing operations such as teacher and admin salaries, maintenance, utility bills, technology, bussses, etc.
Bond funds are used to provide infrastructure and durable goods. This includes school buildings, new equipment, improvements to facilities, etc. Think of a bond like a loan you use to purchase your house. You may not have the cash available for that in the bank so you borrow the money and use your annual cash flow to pay the debt back.
I&S taxes are used to provide the cash flow to service the debt.
Why this has become more popular is that the state cannot control local tax payers this way. The tax payers in the district must approve the bond and the tax rate associated with the bond.
This gives the power to the stakeholders (tax payers) in the district to determine what is in the best interest for their local situation.
Bond money cannot be used for ongoing concerns like teacher salaries, maintenance or other operating expenses. That is because you don’t pay for recurring expenses with term debt. It doesn’t make economic sense, and it is against the law.
Adding the outstanding debt to the annual debt service is disingenuous and does not make any kind of financial sense. The debt service is an annual cash flow that pays the outstanding debt. As the debt service is paid the outstanding debt is reduced.
School finance is unnecessarily complicated in Texas and in my opinion purposefully designed that way so that the common person does not know what is happening.
You may have differing opinions on Texas public schools, but at least use facts and not made up information.
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This reminds me of the way experts take statistics and polls and shuffle them around to make them sound right, when really, it’s meant to confuse people and hide the truth.
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I wonder why? Political favors or graft or manipulation, perhaps?
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