BOND "DEAL" SADDLES BISD WITH $650,000 DEBT FOR 18 YEARS

By Juan Montoya
Where is the Brownsville Herald's Gary Long now?
Where are the radioactive bloggers who disparaged those of us who were warning about the lethal bond package being sold to the Brownsville Independent District as "free money" only to find out now that it will cost the district an additional $650,000 a year for the next 18 years?
It's funny how Long praised the performance of the insurance vendor as saving the district employees money recently without delving into the complaints from the employees on the level of service or the delays in acquiring it.
We still remember him giving the district 55 inches of copy when its administrators tried to deny they were dipping into the reserve funds to cover $68 million in defic..., ahem, "cost overruns."
Instead, in today's edition of the daily, Long makes nice with a long piece on the district's choirs.
We take no pleasure in telling you "we told you so," but, well, we told you so.
In item nine of yesterday's meeting under the title of "Information, discussion, and possible action referencing the Lease Revenue Qualified School Construction Bonds Series 2010A, 2010B, 2010C, and 2010E. Presentation made by Estrada & Hinojosa – Financial Advisors, and Fulbright & Jaworski – Bond Counsel," the sordid truth emerged.
Noe Hinojosa, who has made an industry of traipsing over the local panorama of debt-ridden districts, municipalities and other public entities and convincing them that he can put together "packages" that will allow them to encumber themselves even more for mere "peanuts," lamented that Texas Eduction Agency had changed the rules on him pertaining to the Instructional Facilities Allotment (IFA).
On December 7, the BISD voted to authorize the issue more than $25 million dollars in new construction projects under the Qualified school construction bond Program governed under Section 44.035 of the Texas Education Code.
The IFA program was authorized in House Bill 4 by the 75th Legislature in spring 1997 and became effective September 1, 1997. The IFA program provides funding to districts to assist with debt service payments on qualifying bonds and lease-purchase agreements.
To receive IFA program assistance, a district must submit an eligible application to the Texas Education Agency (TEA). The proposed bond or lease-purchase proceeds must be for the purchase, construction, renovation, and/or expansion of instructional facilities. On close of the application cycle, the TEA ranks all eligible applications in order of property wealth per student in Average Daily Assistance.
State aid under the IFA program provides a guaranteed yield of $35 per penny of tax effort per unweighted ADA.
State assistance is awarded beginning with the district with the lowest property wealth and continuing through the other eligible districts until all available funds have been used. If a district meets and maintains all IFA conditions, Texas statute guarantees IFA state aid for the life of the debt that has been approved for funding.
Since 1997, when the program was initiated, the state has granted more than $350 million in such aid to school districts.
Making the local board believe that the gravy train would continue rolling, Hinojosa, BISD Superintendent Bret Springston and Chief Financial Officer Tony Fuller presented the plan January 11 to the board to use $25 million in funds from the expected revenue of the new construction bonds.
Between the assistance through the federal government's Recovery Act (stimulus money) paying 70 percent and the IFA picking up the other 35 percent, the district, they argued, could stand to make free money on the deal.
But, lo and behold! On January 6, TEA had requested an amendment to the application which will mean BISD is on the hook for $9 million dollars (some say $12 million) or about $650,000 a year instead of the $150,000 promised by Hinojosa and associates.
The board action came a full week after the TEA decision. Now Hinojosa, Springston and Fuller are saying they didn't know about it when they recommended that board members approve the application.
Apologists will say that even if the board was sold a bill of goods, it's not that bad because we still need the structures.
After all, they say, the federal and state government will pay 80 percent of the cost and the taxpayers of the BISD will only pay 20 percent.
Everything being equal that argument would hold water.
But the landscape today is much more dire than that.
The BISD is scheduled to lose as much as $50 million this biennial as the Texas Legislature tries to cut as much as it can to pass a balanced state budget. Appeal the TEA "change" in the rules all you want, but there is little or no hope that Austin will heed your lame call.
The district's fund balance – ravaged in the past two years under the watch of Rick Zayas and his bod Ruben Cortez with Rolando Aguilar and Joe Colunga abetting them – was depleted from from a healthy $148 million to $78 million.
We still remember former BISD counsel Mike Saldana assuring his denizens at the Palm Lounge that the district's finances were in great shape. He would, of course, be one of the beneficiaries of the excessive legal fees that were a prime reason that the voters rejected his compadres in their bid for re-election.
People are now saying they were "misled" by the TEA, Springton, Fuller, and, mainly, Hinojosa and his cronies. But that doesn't stop the pilferage of the district from continuing, does it?
With the rush to award contracts and start construction, a majority of the board (Dr. Enrique Escobedo joined Aguilar, Colunga and Pena) went right ahead and voted to encumber the district's taxpayers for the next 18 years to the tune of $650,000 a year and take another bite out of the reserves.
Is it any surprise to anyone that Escobedo's brother (a building contractor) was in the audience when the vote was taken?
You can stretch the facts and say that the state misled the superintendent, the chief financial officer, the financial advisor and counsel, and eventually, the board. But that finger pointing does not alter the fact that the ones stuck with the bill are the taxpayers of the district, its teachers and, ultimately, its students.
Incompetence is incompetence. You can put lipstick on a pig and it'll remain a pig.
The cuts will begin and services will be curtailed. But those who helped to perpetrate this deceit will laugh all the way to the bank.
Would you buy the picked-over carcass of our school district from Sprinsgston, Fuller, Hinojosa, or the majority of this board?