Houston school system places $4.4 billion of bonds on Nov. 5 ballot

Houston Independent School District will seek bond authorization for the first time in 12 years after its board of managers voted late Thursday to place a two-part, $4.4 billion debt package on the Nov. 5 ballot.

The 9-0 vote came after a lengthy public comment period during which many speakers repeated “No trust, no vote” as they expressed distrust for state-appointed Superintendent Mike Miles.

Texas’ largest public school system, which serves more than 180,000 students in 274 schools, is run by a state-appointed board of managers and superintendent after the Texas Education Agency took it over last year citing academic performance issues. 

Rolando Martinez, the only board member to speak ahead of the vote, said the bonds are needed to address aging infrastructure.

“Just like there was in the last bond, we will have an oversight committee,” he said. “There’s been a commitment to have a dashboard as well for our public to be able to track that. In addition to that we have our board audit committee, which will oversee that aspect as well.” 

Nearly 32% of Houston ISD schools are more than 50 years old and 65 are projected to exceed capacity by 2030, according to a May presentation to the district’s Community Advisory Committee.

Proposition A asks for $3.96 billion of bonds to rebuild, renovate, or expand schools, while Proposition B seeks $440 million of bonds for technology equipment and systems. 

If approved by voters, the district anticipates issuing the 25- to 30-year general obligation bonds in tranches and does not expect to raise the property tax rate to pay off the debt.

The district’s last trip to the ballot was in November 2012 when voters approved $1.89 billion of bonds to replace and repair 40 schools. Prior to that the school system received bond authorizations totaling $2.29 billion from elections in 1998, 2002, and 2007. It currently has no authorized but unused debt capacity.

The GO bonds have underlying ratings of Aaa from Moody’s Ratings and AA-plus from S&P Global Ratings and carry triple-A ratings through the Texas Permanent School Fund’s bond guarantee program.

As of June 30, 2023, Houston ISD had $2.12 billion of outstanding GO and lease revenue bonds, and maintenance tax notes issued between November 2009 and March 2023, according to the district’s fiscal 2023 annual comprehensive financial report.

Ballots in the Lone Star State have been bursting with school bonds with 211 issues totaling $10.18 billion in the May 4 election. Voters only rejected 58 issues totaling $2.57 billion or 25.2%, according to Texas Bond Review Board data.

The last Texas school district with a huge bond election was Austin’s $2.44 billion, three-part proposal, which voters approved in November 2022. At $4.4 billion, Houston ISD’s is reportedly the largest for a school system in state history.

A barrage of school bond issuance last year helped make Texas the biggest municipal bond volume state for the first time since 1981.