In his 25 years in the school bond business, Ryan O’Hara has never seen a school district take such a significant step to pay down its debt principal as the one approved by the Clear Creek Independent School District Board of Trustees on Monday. “The school district should be applauded for putting $12 million in cash to pay off debt, early,” said Ryan O’Hara, Senior Vice President of Hutchinson, Shockey, Erly & Company. “This will make news in the bond market.”
When property values increased this past year, the district accrued $12 million in revenue more than what it needed to apply to its annual debt payments associated with previous school bond programs. Monday, the school board unanimously approved the superintendent’s recommendation to apply these funds to pay down the principal of outstanding bonds, no different than if a homeowner paid more towards the principal of their home mortgage than what was required under a repayment plan. This cash towards debt is unrelated to the current 2017 CCISD Bond program proposal, yet the anticipated move had already been assumed in debt schedule payouts if the May 6 Election is approved by voters. “Essentially what this all means is that Clear Creek ISD takes aggressive steps to be effective stewards of taxpayer dollars,” said Paul McLarty, Deputy Superintendent of Business and Support Services. Based on the debt analysis and assumptions, the school district’s current and proposed debt will be paid off within 24 years, positioning CCISD at the lower end of debt-per-student compared to other fast growth school districts that rely on bond programs.
With more than 1,200 school districts in Texas, the Clear Creek Independent School District is the 28th largest based on student enrollment and ranks 25th based on authorized and issued debt. This 25th ranking also includes financial projections if the $487 million CCISD bond is approved by voters on May 6, 2017.
If the $487 million bond proposal is approved by voters, the District would gradually sell bonds at approximately $162.3 million per year for three years while simultaneously paying off debt at a rate of $34.0 million upwards to $76.8 million per year. Based on this analysis, the highest level of debt the District will accrue is $1.24 billion in 2019 before it goes down. Over the past 15 years, the school district has refinanced debt to take advantage of low interest rates. This has resulted in $65.5 million in savings.
As with all Texas school districts, Clear Creek ISD receives a AAA bond rating through the State of Texas Permanent School Fund Guarantee Program. These financial transactions, along with the district’s conservative fiscal practices, have helped Clear Creek ISD maintain a strong underlying bond rating with Standard & Poor (AA), Moodys (Aa2), and Fitch (AA+). The school district has also released a debt transparency report as of March 15, 2017 which indicates existing authorized bond debt of $814,000,000 is equal to $3,486 for each person living in the district. The district has a population of 233,523 in 2017.