Corpus Christi ISD

Texas Education News
July 2008

IN THIS ISSUE:

Wireless Network Selected by Houston's Spring Branch Independent School District

Spring Branch Independent School District (ISD) in Houston, Texas has selected Aruba's 802.11n wireless LAN technology and identity-based security for use across the district's 51 facilities including 46 elementary, intermediate, and high schools. Spring Branch ISD covers more than 44 square miles and supports more than 32,000 students and 6,800 faculty and staff. In accordance with the district's technology plan, a district-wide secure wireless network was needed to address the learning and administrative needs of faculty, staff, and students. The legacy wireless network was not available district-wide and a new, more capable network was sought to address security and scalability requirements. Following an extensive review of competing solutions, Spring Branch ISD selected Aruba as the wireless network supplier.

"We run a sizable district spread over a large area, and it was imperative that the new wireless network be very simple to set-up and maintain, meet our current and future networking needs including streaming video, and offer high security to protect the privacy and confidentiality of faculty, staff, and student communications," said Venu Rao, Spring Branch ISD's Chief Information Officer.

"We will deploy roughly 2,000 802.11n access points across fifty one facilities, and we want to minimize IT staff overhead associated with network operations. Aruba's networks automatically optimize performance and minimize interference, and its centralized management minimizes truck rolls by offering remote diagnosis, management, and code downloading. Our security needs will be addressed by high security encryption and a policy-based firewall."

Education Solution for Fort Worth Schools

The Fort Worth Independent School District (ISD) in Texas has purchased Tyler’s Education Management Solution (TEMS), along with a Student Assessment Analysis System from Tyler’s partner, SchoolCity Inc. Additionally, a contract signed between Tyler and the District last fall for Tyler’s MUNIS financial management solution has been expanded to include Tyler’s VersaTrans transportation management solution. In total, the new agreement and the amendment are valued at more than $4.7 million.

The Fort Worth ISD has chosen to invest in Tyler’s TripTracker product, a Web-based school field trip management and planning software. The solution will enable the District to manage all aspects of the field trip process from the initial request through invoicing. It features automated driver selection and user-defined approval process and is designed to make the planning process more efficient.

Debra Ware, general manager of the Fort Worth ISD’s Enterprise Resource Planning Department, is confident in Tyler’s ability to satisfy the District’s requirements and to enable it to meet Texas educational reporting mandates. “When it came to purchasing Tyler’s Education Management solution, Tyler demonstrated a willingness to be flexible and to work with us. Tyler’s readiness to listen to how the product needed to be configured to accommodate the specific needs of the Fort Worth ISD and to meet our reporting requirements made all the difference.”

Ware also pointed out that Tyler’s responsiveness was another key factor in the Fort Worth ISD’s decision to invest in Tyler’s solutions. “Following our first round of vendor demonstrations, we pointed out the areas where we wished to see modifications to accommodate our needs. At the second round of demos, Tyler had addressed everything we had specified. No other vendor did this. We felt Tyler not only listened to what we had to say, but also responded to our needs. It’s been the same with all our dealings with Tyler for the solutions we’ve purchased.”

The Fort Worth ISD educates approximately 80,000 students from grades pre-K through 12, making it the 36^th largest school district in the nation by student population. The District has more than 10,000 employees and an operating budget of $566.7 million. With a population of over 624,000, Fort Worth is the fifth largest city in Texas and the 19^th largest in the United States.

Corpus Christi ISD

The Port of Corpus Christi ranks as the sixth largest in the nation in terms of tonnage and 44th in the world. Padre Island National Seashore, with 68 miles of beach, and Mustang Island State Park are leading tourist attractions. The Corpus Christi Army Depot is the largest industrial employer in south Texas and there is a U.S. Navy installation in the area. Wealth levels are below state and national norms, although this is somewhat offset by the area's lower cost of living. The April 2008 unemployment rate for the city at 3.6% is better than the state and national averages of 3.9% and 5%, respectively.

The district is the 24th largest in the state with an enrollment of nearly 39,000 and serves a population of about 284,000. The district includes a significant portion of the city of Corpus Christi (general obligation bonds rated 'AA-' by Fitch). Taxable assessed valuation (TAV) gains have averaged 8.6% annually in the last five years with officials projecting continued growth, but at a more moderate pace. Although enrollment has been essentially flat, increased residential development particularly in the southern sector of the district is expected to increase the district's student population in the lower grade levels. Corpus Christi is the eighth largest city in Texas. The area economic base consists primarily of petrochemicals, shipping, tourism, agriculture, and the military.

Historically, the district has maintained sufficient reserves in the general fund, ranging from 14.9% to 17.3% of expenditures and transfers out in the last five fiscal years. In addition, the majority of the general fund balance has historically been undesignated. For fiscal 2007, the undesignated general fund balance stood at nearly $49 million, or 16% of operating expenditures and transfers out and above the district's informal target of 15%. The total general fund balance still represents 19.1% of expenditures and transfers out.

For the close of fiscal 2008, preliminary results indicate an unreserved and undesignated general fund balance of $39.3 million, reflecting a decline of about $1.6 million due one-time capital-related expenses. As in the case of most school districts in Texas, financial pressures will likely grow as the district's operating tax is already at $1.04, which includes the four discretionary cents allowable under the state's funding formula. Under the funding formula, the school district may increase its M&O tax rate up to a maximum of $1.17 but requires voter approval to do so. Moreover, the district is facing challenges with a modest decline in enrollment, but has proactively taken measures to control expenditure levels.

Little Elm ISD

Little Elm ISD is roughly 30 miles north of Dallas , encompassing 39 square miles in eastern Denton County, with portions of the district located on Lake Lewisville. The ongoing expansion of the Dallas-Fort Worth metroplex in recent years produced accelerated population growth in the district. The district is predominantly residential, with real estate interests dominating the top taxpayer list. District officials report the ongoing development of higher-end, lakeside residential communities, despite a slowdown in housing activity comparable to much of Dallas-Fort Worth metro area.

Tax base growth has been sizable over the past five fiscal years, outpacing enrollment gains at not quite 21% per year. Prior years' enrollment growth added roughly 500-600 new students per year. With current enrollment at not quite 5,400, enrollment projections have shifted downward with slightly lower annual rates of growth than previously projected. The fiscal 2008 enrollment growth rate of 4.2% or 220 students was substantially less than prior years. Full build-out is projected over the next 10 years at approximately 9,000 students. The sharp reduction in enrollment additions from previous projections is due in large part to a multi-phased, active living community (Frisco Lakes), which will utilize roughly one-half of all remaining residential parcels and is anticipated to result in few if any additional students.

Despite operating growth pressures, the district has historically maintained a sound financial profile, which has been strengthened through an upward trend of operating reserves since fiscal 2003. Audited fiscal 2007 results were even stronger with $14.6 million in unreserved general fund balance or roughly 45% of spending. District officials expect to close fiscal 2008 with no more than a modest $200,000 drawdown to fund balance. Liquidity is good and has been improving; in fiscal 2007, the district had approximately 158 days of cash on hand. District officials have a minimum general fund balance goal of three months of expenditures and transfers out, and for fiscal 2009, this target is expected to be maintained, despite a planned drawdown that will bring general fund balance closer to $13 million. Plans for fiscal 2009 include approaching voters for approval of the full amount ($0.14) of the discretionary tax levy for operations that state law allows in order to provide additional financial flexibility in the future.

The $144.5 million in bond authorization approved by 85% of district voters in February 2002 is anticipated to fund district facility needs through fiscal 2012. After this sale, the district will have approximately $39 million in remaining authorization, although unless there is continued, strong tax base growth, the district will not have the tax capacity to issue it for the next several years. As is the case with many fast-growing school districts, the district's debt levels are high. Debt is amortized slowly, reflecting the use of capital appreciation bonds to minimize tax rate impacts and shift debt burden to future taxpayers. Principal amortization is not quite 24% in 10 years. As a result of slow debt repayment, debt ratios are projected to remain high for the next several years. However, in light of the recent slowdown in enrollment growth and available capacity in many of the district's facilities, capital needs beyond the current bond authorization appear limited, which should allow the district's debt burden to moderate over time.

Mansfield ISD

Located southeast of Ft. Worth, the majority of the district lies in southeastern Tarrant County, with a smaller portion overlapping into Johnson County and includes the city of Mansfield and portions of Arlington and Grand Prairie. The district is the third fastest growing in the state, growing an average of nearly 11% annually for the past five fiscal years, reaching an enrollment of nearly 29,549 students in fiscal 2008. Demographic projections, updated annually to assist facility planning, predict enrollment will increase by one-third to 37,000 by fiscal 2012 (5.8% annual growth).

In May 2006, district voters approved a record high $241.5 million bond package for the construction of six new schools, renovation of existing schools, and construction of an additional transportation facility. The district has $52.6 million in remaining authorization. Construction has begun on one of the new elementary schools; and, the renovation projects for the existing schools, which include a new transportation facility, have been completed.

At $3,300 per capita and 7.0% of taxable assessed value (TAV), direct debt ratios are high even after adjusting for state support of outstanding debt totaling about 30% of annual debt service. The overall debt burden is also high at just over $4,300 per capita and 8.7% of TAV. The district's high debt levels are a result of sustained double-digit enrollment growth brought about by explosive residential development. Principal amortization is below average at 31% for 10 years and is designed to minimize the debt service tax impact for the current authorization, which is projected to peak at $0.45 per $100 of TAV, up $0.04 from its current level.

The district's financial position remains strong, with a sizable operating surplus in fiscal 2007, increasing its undesignated fund balance to $56.9 million, or over 34% of spending. This result follows several years of smaller operating surpluses, indicative of the district's ability to manage its rapid growth. The fiscal 2008 budget is balanced including the additional staff needed to for new schools.

The district's fast-growing economy is marked by the continuing expansion of its industrial base, substantial residential construction, retail sector growth, and health care facilities. Two entertainment venues opened recently, which likely will be regional draws. TAV has grown by a compound annual average of over 13% per year over the last five years. There are more than 12,000 single-family homes in various stages of development in more than 45 different subdivisions, most of which are located in the cities of Mansfield and Grand Prairie, with a smaller portion in Arlington.

Northside ISD

The district has consistently strong financial management and performance within a rapid enrollment growth environment, continued strong taxable assessed valuation (TAV) growth, and its large and diverse employment base, balanced by the district's above average debt levels. The district's rising debt burden is due to very large growth related capital needs, with voters consistently supporting the district's bond programs. Serving the rapidly growing northwest portion of Bexar County and surrounding areas, the district continues to record sizeable gains in TAV, rising by a compound average annual rate of almost 13% per year over the last five fiscal years, including a large 20% increase in fiscal 2008.

To accommodate its rapid enrollment growth, averaging 3,000 students per year, an impressive 70% of voters approved the largest bond election in district history for $693 million in May 2007. The favorable prospect for continued rapid tax base growth and the strong voter support for the bonds moderate the credit impact to the district's debt profile.

Annual enrollment growth has averaged almost 5% per year over the last five years. The district's fiscal 2008 enrollment grew by over 3,600 for a total enrollment base of 85,546 students, making it the state's fourth largest district. This high-growth mode caused the district to seek and obtain nearly $1.8 billion in bond authorizations since 1998. The May 2007 authorization funds growth-related needs that include nine elementary schools, two middle schools, and one high school plus classroom additions, campus renovations, science labs, and technology and transportation needs.

The current offering represents the second installment of the aforementioned authorization. The district's current direct debt burden has risen substantially and now totals over $2,800 per capita and 4.5% of TAV, due in part to declining amounts of state support for outstanding debt. Overall debt ratios are also above average at over $4,833 per capita and 7.6% of TAV. The district's principal amortization rate is slow at 31% in 10 years, but is not unusual for rapidly growing districts. The May 2007 bond authorization is projected to increase the district's debt service tax rate by a modest $0.045 per $100 TAV.

Despite pressures associated with consistent enrollment growth, financial performance has been solid as evidenced by undesignated fund balances of 10% or better of expenditures since fiscal 1995, which exceed management's goal of one month of expenditures. For fiscal 2007, the district posted a large $22 million general fund operating surplus due to lower than budgeted expenditures. The district's growing financial cushion is impressive, comprised of a $48.6 million undesignated fund balance and $56 million in additional reserves, totaling $104 million or 19% of spending in fiscal 2007. Notably, the district has set aside $52 million of these reserves for the opening of new schools, to purchase furniture, equipment, and for pre-design costs which it will draw down over the next three years.

Fiscal 2008 is projected to use nearly $8 million of the designated general fund reserves for the opening of three new schools and the provision of 5% pay raises. The proposed fiscal 2009 budget will include the adoption of the optional $0.04 O&M tax levy allowed by law without voter approval. These 'super pennies' are projected to generate $22 million in additional local and state revenues and will help offset over $19 million in new growth expenditures, including the opening of three new schools, plus $19 million in teacher pay hikes. Aided by year-end budget sweeps and the use of new school designations, the district projects it will maintain strong year end reserves through fiscal 2011.

Comal ISD

Located approximately 20 miles north of San Antonio, Comal ISD serves a predominantly rural 585-square-mile area primarily in Comal County and extends to small portions of Kendall, Hays, Guadalupe, and Bexar counties. Enrollment has grown at a steady rate averaging 6.5% annually in the last five fiscal years and has reached 14,450 in the current fiscal year. The district benefits from its proximity to San Antonio and Austin with roughly two-thirds of its working population commuting to these labor markets.

Conservative budgeting practices and financial management have enabled the district to maintain healthy financial reserves, despite ongoing enrollment pressures. From fiscal years 1997-2002, general fund balances exceeded 20% of total expenditures and transfers out. Due to numerous one-time capital outlays, general fund reserves were drawn down below the 20% level in fiscal years 2003 and 2004. The district quickly recovered with three years of positive results, most notably a $16.6 million net operating surplus in fiscal 2007 with lower than budgeted expenditure levels combined with greater revenue growth.

By the close of fiscal 2007, the district reported a $45 million unreserved general fund balance, equivalent to 47% of total expenditures and transfers out and well within the districts goal of maintaining three to four months of spending. The district expects to add approximately $4 million to fund balances for fiscal 2008.

Typical of fast-growth school districts in Texas, direct and overall debt levels are high and principal amortization is slow. The new 2008 bond authorization is not expected to affect the current debt service tax rate of $0.27 per $100 of TAV assuming a 95% collection rate and moderately declining tax base growth. Comal County's unemployment rate compares favorably to the state and national rate. Wealth levels are slightly higher than the statewide average, but lower than the national levels.

Edinburg CISD

Serving an estimated 133,000 residents, the district is located in fast-growing Hidalgo County, adjacent to the U.S.-Mexico border and near the southern tip of Texas. The district's service area includes primarily the City of Edinburg, a small portion of the City of McAllen and unincorporated areas of Hidalgo County. The district economy is anchored by distribution of agricultural products and goods shipped from Mexico, as well as oil and gas exploration. The county unemployment rate, historically in the double digits, and hovering close to 10% from 2000-2004, began to decline in 2005 upon passage of the North American Free Trade Agreement. While the U.S. unemployment rate has increased through April 2008, Hidalgo County's unemployment rate has improved to 5.7% in April 2008 (compared to 6.2% the prior year), but remains above the state and national levels of 3.9% and 5%, respectively. County per capita personal income lags far behind those of the state and nation at 54% and 48%, respectively.

Over the last five fiscal years, the district's financial position has been healthy and remained stable despite the pressures of ongoing growth and capital constraints stemming from the district's lack of voter support for a prior bond program. Tight budgetary controls have been the norm for school district administrators, due to the difficulty posed by having to utilize funds from general operations to provide for capital outlays. For the fiscal year ended Aug. 31, 2007, the district recorded an operating surplus of $8.2 million, above the $7.2 million average surplus recorded in the last five fiscal years. The fiscal 2007 unreserved general fund balance was $24 million, or 10.1% of spending, slightly below the prior year. As a result of this refunding, a $5.2 million reserve that was required by the legal covenant of the lease purchase revenue bonds will be released for capital projects.

District officials expect to end the current fiscal year (2008) with an estimated $4.3 million increase to total fund balance. For fiscal 2009, financial management staff expects to recommend a $2 million to $3 million increase to the general fund reserves. With the operating capacity created by this refunding (est. at $4.5 million annually) and management's conservative budgetary practices, Fitch believes the district is capable of increasing its fund balance reserves in the near term to a level commensurate with a higher rating.

Currently at $4.9 billion, the district's taxable assessed value (TAV) has grown at a compound average annual rate of 11.6% since fiscal 2003, outpacing annual enrollment gains of 3% to 4%. In fiscal 2007, TAV jumped 20% in large part due to increased mineral valuations and is estimated to increase at about the same pace for next year. For fiscal 2008, the top 10 taxpayers comprise a concentrated 22% of the tax base, but more diverse compared with 31% in fiscal 2003. Eight of the top 10 taxpayers are in the oil & gas sector, and the single largest taxpayer, Shell Western E&P, represents 8.2% of TAV.

The district's debt ratios, after factoring in state support, are moderate. Repayment of district debt is better than average reflecting the district's lack of GO issuance over the last decade due to a failed bond election. However, the district received overwhelming voter support in an election held in May 2008. More than 70% of district voters approved two bond propositions; one to realize the current refunding and the other to issue nearly $111.9 million in new money bonds. The district plans to return to the bond market to issue the entire authorization once it receives a commitment from the state for debt service support, expected to be received in the next few months.

Longview ISD

Longview ISD is located in Gregg County, approximately 120 miles east of Dallas and 60 miles west of Shreveport, LA and is served by major transportation corridors. The district is part of the larger Longview metropolitan statistical area (MSA) that serves as the industrial, retail, and distribution center for East Texas and is estimated to total about 204,000 in population. The local economy, which has long served as a center for oil and natural gas operations, has become increasingly diversified. Health care, manufacturing, distribution, and education are all major employment sectors. Almost half of the district's tax base is commercial/ industrial, and from fiscal 2004-2008, TAV grew steadily, averaging gains of almost 9% annually. There are a number of large-scale, construction/ expansion projects currently underway or planned for local industries that are expected to add to the district's tax base over the near term.

Population growth has been modest in the area at an average annual rate of slightly less than 1% since the 2000 Census, which is below that of the state. Longview MSA unemployment levels have been lower than those of the county and state since 2004; wealth levels are slightly below those of the state; however, this is somewhat mitigated by the lower cost of living of the region. Totaling about 8,100 students in fiscal 2008, the district's enrollment has fluctuated in recent years, with a slight decline of less than 1% on average annually since fiscal 2003. District officials point to aging facilities and limited academic programs as contributing factors in enrollment declines. New and improved school facilities along with expanded academic programs, (such as the recently established science and technology high school academy), are expected to draw more students to the district over the near term. Demographers project enrollment growth at a rate of 2% annually over the next ten years.

The district's financial reserves have trended upwards since fiscal 2003 and audited results for fiscal 2007 continued that trend. The district reported a very strong unreserved general fund balance of $24.3 million or just less than 45% of spending in fiscal 2007, which exceeds the district's operating reserve policy amount of at least three months of expenditures. Fiscal 2008 results reportedly remain on target, and district officials anticipate closing the year with a surplus and a further increase in reserves.

The district's debt will increase more than ten times with this issuance, although debt levels are only moderately high at roughly 4% of TAV. Prior to this authorization, the district had very little GO debt outstanding. The current offering represents the first portion of the district's $266.8 million authorization passed by a slim majority of voters in May 2008. The authorization will be used for rebuilding, renovating or repurposing all of the district facilities. The remainder of this authorization is expected to be issued over the next two years. It is anticipated that the district will have minimal capital needs after this authorization. Amortization of principal is slow; in 10 years, not quite 25% of principal will be retired.

Wylie ISD

Wylie ISD is located approximately 23 miles northeast of Dallas on Highway 78 in Collin County, serving primarily the city of Wylie. The northern expansion of the Dallas-Fort Worth metroplex over the past decade has produced substantial population growth in Collin County and the city of Wylie, as well as rapid student enrollment increases for the district. The city of Wylie's population doubled from 2000 to 2005 to an estimated 29,000 residents in 2005. Considered a fast-growth district, enrollment for fiscal 2009 is estimated at about 11,100 students. Having grown by an annual average of nearly 15% from 2002 to 2007, the pace of enrollment growth is slowing with the decline of residential construction, growing at a more moderate 6% for fiscal 2008; this change still represents a large increase of over 600 students. Given the pace of development, officials expect enrollment to reach about 25,000 at full build-out in the next 10-15 years.

District debt levels are high and are expected to remain so considering growth pressures, even after factoring in state support for a portion of existing debt service. The current offering is a refunding for savings. The district does not currently have any remaining authorization to issue bonds, but is in the process of forming a committee to determine the needs to take the district through to 20,000 to 25,000 students. Capital needs are expected to remain substantial if historical enrollment growth rates are sustained, but the recent slowdown suggests the pace of borrowing may slow somewhat in the near term.

Despite the pressures associated with rapid enrollment growth, financial performance has been stable. The district changed its fiscal year in 2006 from August 31 to June 30, producing a 10-month audit that essentially reflects a year's worth of revenues, but only a partial year of expenditures. As a result, $4.4 million was added to general fund balance in fiscal 2006, bringing the total to $10.6 million or 22% of spending. For fiscal 2007, the district had projected adding about $1 million to general fund balance, but due to lower than budgeted expenditures for utilities and salaries, the district actually added nearly $4 million to fund balance. The general fund ended the year with $14 million in unreserved balance or 23% of spending. However, for fiscal 2008 the district's actual enrollment levels were below projections, resulting in a revenue shortfall that is expected to decrease reserves by about $3.8 million to a still adequate 15% of spending. This total would comply with the district's policy of a minimum of 1.5 months of operating expenditures in reserves.

The economic base of the district is shifting away from an agricultural area to one with an emphasis on affordable residential development with some commercial and light manufacturing. Tax base growth continues to outpace student enrollment gains at slightly less than 17% annually over the past five fiscal years. Many residents commute to work in the nearby cities of Dallas, Plano, Garland, and Richardson. The area continues to experience increased retail development with the growth of residential construction. Collin County wealth levels as measured by per capita personal income are well above state and national levels. The county's April 2008 unemployment rate of 3.7% compares favorably to the state's 3.9% and 5.0% national unemployment rate.

Birdville ISD

The district is located in Tarrant County, next to the City of Fort Worth and between Dallas/Fort Worth International Airport. The district's 42 square mile service area includes the cities of North Richland Hills, Haltom City, Richland Hills, and Watauga, as well as a portion of the City of Hurst. Taxable assessed valuation (TAV) growth continues to exceed student enrollment growth at not quite 5% annually since fiscal 2003. The tax base is predominately residential, and serves as a bedroom community for the greater metropolitan area. Recently, there has been additional oil and natural gas production activity, along with higher mineral valuations, since various properties within the district's tax base are located in workable portions of the Barnett Shale, one of the largest natural gas fields in the U.S. Area wealth levels are above state and national averages. Birdville ISD remains one of Tarrant County's largest districts with roughly 22,000 students since fiscal 2002; however, overall district enrollment growth is primarily flat, reflected in the decline of less than 1% annually in student enrollment over the past five years. In an attempt to bolster overall enrollment, the district will accept out-of-district transfer students at all grade levels starting in fiscal 2009.

The district's financial performance has historically been strong, with general fund unreserved fund balances of roughly 22%-28% of expenditures, transfers out, and other uses since fiscal 2001; the general fund balance includes an annual $12.5 million designation for budget contingencies since fiscal 2003. Audited fiscal 2007 results reflect the continuation of strong reserve levels and were aided by a change in the district's fiscal year-end from Aug. 31 to June 30. The district anticipates closing fiscal 2008 with general fund reserve levels comparable to prior years at not quite $39 million or almost 26% of spending, despite a $7.5 million operating deficit that incorporated a reduction in teaching positions. The fiscal 2009 budget anticipates a $3-4 million drawdown on general fund reserves primarily for operating expenditures that will include salary increases that maintain the district's competitive position in the area for starting teachers. Fiscal 2010 is projected to be a balanced budget. Recent developments for the district include the leasing of its mineral rights on various properties. The district received an $11 million bonus payment from Chesapeake Energy Corporation (long-term IDR of 'BB' with a Negative Outlook by Fitch) that is part of special revenue funds, and over the near term, this agreement is conservatively expected to generate $300,000-$400,000 annually for the district.

Including this issuance, debt levels remain moderately high, with amortization of direct debt slightly above average at roughly 54% of outstanding debt retired in ten years. The district's debt no longer receives substantial state support as in prior years. The new money portion of the current offering represents the final issuance from a $128.6 million authorization approved by voters in November 2006. A portion of this offering also will be used to refund certain outstanding obligations and generate a present value savings for the district. The district has no specific plans to seek additional debt authorization from voters over the near term.