Review of Financial and Debt Considerations Monday, February 26, - PowerPoint PPT Presentation

Review of Financial and Debt Considerations Monday, February 26, 2018 Securities, insurance and advisory services offered through BOK Financial Securities, Inc., member FINRA/SIPC and a subsidiary of BOK Financial Corporation. Services may be offered under our trade name, BOK Financial Advisors. NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE

School Districts Are “Economic Drivers”  Generally Speaking: School District Revenues/Expenditures = Quality of Education = Quality of Community = Home Values and Economic Development 1

School Districts Are “Economic Drivers”  GCISD is the largest employer in the City of Colleyville.  GCISD is the 4 th largest employer in the City of Grapevine.  The capital expenditures within GCISD’s bond programs generate ancillary economic benefit. Summary of Projected Economic and Fiscal Impact of Capital Spending – Proposed $248,975,000 Bond Election Conducted by Terry L. Clower, Ph.D. Description Impact Economic Activity $ 301,127,000 Labor Income (salaries, wages, benefits) 137,119,000 Total State and Local Tax (includes fees) 11,854,000 Employment (person years of employment) * 2,312 *A person year of employment is one job lasting for one year. 2

Cooperation for Economic Development Projects with the Cities of Grapevine and Colleyville  GCISD participation in certain Tax Increment Reinvestment Zones (“TIRZ”) have promoted “economic development” in partnership with the Cities of Colleyville and Grapevine.  City of Colleyville TIRZ No. 1  Contributed funds for public infrastructure  GCISD receives 26% of funds contributed to the TIRZ for debt repayment  City of Grapevine TIRZ No. 1 – Grapevine Mills  The TIRZ terminated in February 2016  GCISD received $24.5 million for joint-use facilities such as the Mustang-Panther Stadium renovations  City of Grapevine TIRZ No. 2 – Gaylord Texan  Received funds for the repayment of the District’s Series 1998 Bonds – Construction of new Grapevine Middle School 3

Where Do the District’s Local Revenues Come From?  The District’s local tax revenues for maintenance & operations purposes and for the repayment of voter-approved bonds are governed by the Texas Education Code – Established by the Texas Legislature.  Each year, the District sets two (2) separate tax rates:  Maintenance and Operations (“M&O”) Tax Rate: Funds the “day to day” operational expenses of the District, including instructional programs, teacher salaries, instructional supplies, security, student transportation, extracurricular activities, utilities, facility maintenance, etc.  Debt Service Tax Rate: Funds the principal and interest on bonds approved by voters for capital improvements.  The Tarrant Appraisal District (“TAD”) and Dallas Central Appraisal District (“DCAD”) are responsible for independently establishing GCISD’s certified home values on an annual basis. 4

Where Do the District’s Local Revenues Come From?  Pursuant to the State funding system, GCISD’s available funding for M&O purposes is based upon an “Equalized Wealth per Student” formula set by the State.  GCISD is a “Chapter 41” or “Property Wealthy” school district as the District generates local M&O tax revenue in excess of the State’s “Equalized Wealth per Student”.  As such, GCISD is annually required to pay the State all local M&O tax revenues generated above the “Equalized Wealth per Student” for each penny of tax effort – Referred to as “Recapture”.  Estimated “Recapture” payment in year 2017/18: $43.94 million or 27.2% of local and State M&O revenues.  Local debt service taxes are not subject to “recapture” – GCISD retains all local funds for bond payments.  The issuance of bonds payable from the debt service tax rate allows 100% of taxes to be used in GCISD! 5

Composition of Total Property Values – Year 2017/18  Single-Family Residential properties comprise 46.2% of the District’s property values.  Business and Commercial properties comprise 43.7% of the District’s property values . Business, Commercial, Industrial, Utilities, Other (43.7%) Oil, Gas & Minerals (0.0%) Vacant Lots, Acreage, Single-Family Farm & Ranch Residential Improvements (46.2%) (1.5%) Multi-Family Residential (8.7%) 6 Source: Tarrant Appraisal District and Dallas Central Appraisal District.

Property Tax Cost Per School Day – Homeowner with One Child in GCISD – Fiscal Year 2017/18 $80  A homeowner with an average taxable home value of $340,206 and one child attending Grapevine-Colleyville ISD: $70  Pays approximately $27.47 of school property taxes for each school day.  This includes the cost of instructional programs, supplies, teacher salaries, $60 transportation, security, Co-curricular/extracurricular activities, facility maintenance and bond payments for school facilities. $50 Cost Per School Day $48.44 $40 $40.37 $30 $32.29 $27.47 $24.22 $20 $16.15 $10 $8.07 $0 $340,206 $100,000 $200,000 $300,000 $340,206 $400,000 $500,000 $600,000 Average Taxable Taxable Taxable Average Taxable Taxable Taxable Taxable Home Value Home Value Home Value Taxable Home Value Home Value Home Value Home Value Home Value 7 Note: Taxes are based upon a 173 school day year.

Historical Total Property Values $18,000,000,000  Since year 2007/08, GCISD’s Total $17,163,144,924 Property Values have increased by 48.5% $16,000,000,000 $16,147,814,421 Total Assessed Valuation $14,795,326,848 $14,000,000,000 $13,932,991,103 $13,228,060,089 $12,960,519,307 $12,871,261,394 $12,701,297,230 $12,590,393,818 $12,541,498,344 $12,000,000,000 $11,561,298,624 $10,000,000,000 $8,000,000,000 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 8 Source: Tarrant Appraisal District and Dallas Central Appraisal District.

Maintenance and Operations  As GCISD’s total property values have increased by 48.5%, the District’s “Recapture” payment has increased by $13,998,219 or 46.8%.  Total Local and State M&O Revenues (Net of “Recapture”):   Year 2007/08 – $110,612,277 Year 2017/18 – $117,687,364 (A) Year 2007/08 Year 2017/18 (A) State State $26,950,747 $11,963,801 Local – (19.2%) Local – (7.4%) Recapture Recapture $29,942,376 $43,940,595 (21.3%) (27.2%) Local (45.1%) Local – Net Local – Net $83,661,530 $105,723,563 (59.5%) (65.4%)  At a student enrollment of 13,890, GCISD’s M&O Revenues per Student have increased by 6.8% over the last 10-years. (A) Budgeted. Source: District records. 9

Historical Average Taxable Home Values $350,000  Over the last 5-years, average taxable home values established by TAD and DCAD have increased by $340,206 36.6% or an average of 6.5% per year. $325,000 Average Taxable Home Value $310,183 $300,000 $285,816 $281,450 $275,000 $250,000 $253,851 $249,024 $225,000 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 10 Source: District records.

What Would be the Perception of GCISD if Average Taxable Home Values Have Declined? $350,000 $340,206 $325,000 Average Taxable Home Value $310,183 $300,000 $285,816 $281,450 $275,000 $250,000 $253,851 $249,024 $225,000 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 11 Source: District records.

Historical Taxes and Average Taxable Home Values $7,000 $350,000  22% of GCISD’s Total Taxes are “Recaptured”. $340,206 $6,000 $300,000 $310,183 $285,816 $281,450 $4,751.66 $5,000 $250,000 Average Taxable Home Value $253,851 $4,332.32 $249,024 Annual Property Taxes $1,038.78 $3,773.06 $3,715.42 $4,000 $200,000 $704.99 $3,351.09 $3,287.37 $582.36 $567.94 $1,213.52 $1,106.42 $607.74 $3,000 $610.75 $150,000 $800.57 $788.34 $711.04 $697.52 $2,000 $100,000 $2,520.91 $2,499.36 $2,390.13 $2,359.14 $2,032.31 $1,979.10 $1,000 $50,000 $0 $0 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 Maintenance & Operations Taxes Debt Service Taxes Recapture Average Taxable Home Value 12 Source: District records.

Historical M&O/General Fund Revenues Per Student (Net of Recapture) $14,000  GCISD’s available M&O Revenues Per Student (net of “Recapture”) have increased by $62. $12,000  Local M&O Taxes have increased by $1,104.  State/Federal funding has declined by $1,042. M&O Revenues Per Student $10,000 $8,900 $8,756 $8,694 $8,493 $8,450 $8,421 $67 $8,163 $283 $804 $360 $920 $261 $569 $861 $8,000 $367 $694 $757 $753 $1,053 $1,382 $6,000 $4,000 $7,913 $7,611 $7,467 $7,376 $7,127 $6,743 $6,508 $2,000 $0 (A) 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 M&O Taxes/Other Local Revenues Retained in District State Program Revenues Federal Program Revenues 13 (A) Budgeted. Source: District’s Audited Financial Statements, Texas Education Agency - PEIMS and District records.

Total Operating Expenditures Per Student – Year 2017/18 (A) Other TIF Payments $233 $410 (1.9%) (3.3%) Instruction & Instructional Support $7,054 (57.0%) Chapter 41 Recapture $3,163 (25.5%) District Operations $1,248 (10.1%) Central Administration $276 (2.2%) 14 (A) Budgeted. Source: District records.