Annual Report of Certain Financial and Local Debt Information. Fiscal Year Ended June 30, 2017

Transcription

1 Annual Report of Certain Financial and Local Debt Information Fiscal Year Ended June 30, 2017 Denotes Required Information Pursuant to Local Government Code, Section This report was posted on the District s website on December 22, 2017.

2 Overview of Certain Financial/Bond Ratings Overview: Pearland Independent School District (the District ) has been assigned the following independent financial/bond ratings that indicate the relative strength of the District s financial and debt management: School Financial Integrity Rating System of Texas ( FIRST ): Pursuant to Subchapter D, Chapter 39 of the Texas Education Code, the State annually deploys a financial accountability rating system to distinguish the level of a school district s financial performance based upon certain uniform criteria. For year 2016/17, the District was assigned a FIRST Rating of Superior and the District s score was 98 out of a possible 100 points. Credit Ratings: The District also maintains independent ratings from certain nationally recognized credit rating agencies, such as Moody s Investors Service, Inc., S&P Global Ratings and Fitch Ratings, Inc. that evaluate the District s financial strength and its ability to pay its existing bonds. Moody s Investors Service, Inc.: Assigns a Aa2 credit rating to the District, defined as Judged to be of high quality and are subject to very low credit risk. S&P Global Ratings: Assigns a AA- credit rating to the District, defined as Having a very strong capacity to meet its financial commitments. It differs from the highest-rating only to a small degree. Fitch Ratings, Inc.: Assigns a AA credit rating to the District, defined as Having very high credit quality and expectations of very low default risk. Indicates very strong capacity for payment of financial commitments and is not significantly vulnerable to foreseeable events. 1

3 Overview of State Funding System State Funding System Where Do the District s Revenues Come From: Pearland ISD is legally required to operate pursuant to the requirements of the Texas Education Code. In particular, Chapters of the Texas Education Code determine the District s ability to generate local tax revenues for maintenance & operation purposes and for the repayment of voter-approved bonds. In this regard, the District annually sets two (2) separate tax rates that are levied upon its certified taxable value that is independently determined by the Brazoria County Appraisal District and Harris County Appraisal District: Maintenance & Operations ( M&O ) Tax Rate: To provide funds for the day to day operational expenses of the District, including instructional programs, teacher salaries, instructional supplies, security, student transportation, extracurricular activities, utilities, facility infrastructure/maintenance, etc. The District s annual funds for maintenance & operation purposes primarily consist of a combination of State funding and local M&O taxes. In general, the dollar amount of each component is determined by the District s Equalized Wealth per Student (i.e. taxable value / weighted average daily attendance) as set by the State. For year 2016/17, the District s sources for M&O revenues are summarized below. M&O Revenue by Source Year 2016/17 Federal (1.4%) State (54.3%) Local (44.3%) Source: District s Audited Financial Statements and District records. 2

4 Overview of State Funding System Interest & Sinking Fund ( I&S ) Tax Rate: To provide funds to pay the principal and interest on bonds previously approved by a majority of voters for capital improvements. The following summarizes the District s bond programs approved by voters over the last 17 years: District s Historical Bond Elections Approved By Voters Dollar Amount Remaining To Be Issued - As of June 30, 2017 Dollar Amount Remaining To Be Issued - As of December 1, 2017 Election Date Purpose Student Enrollment Election Amount December 11, 1999 School Building 10,202 $75,200,000 $0 $0 October 6, 2001 School Building 11,278 $41,000,000 $0 $0 September 27, 2003 School Building 13,037 $37,165,000 $0 $0 October 1, 2005 School Building 15,434 $58,000,000 $0 $0 November 7, 2006 School Building 16,062 $115,638,623 $0 $0 November 8, 2016 School Building & Technology 21,093 $220,000,000 $220,000,000 $100,000,000 Total Dollar Amount Of Authorized But Unissued Bonds: $220,000,000 $100,000,000 On July 6, 2017, the District sold $105,510,000 Unlimited Tax School Building Bonds, Series The par amount and premium received from the sale the of the Series 2017 bonds generated $120,000,000 in construction proceeds that counted against the District s voted authorization. Source: Texas Bond Review Board, Texas Education Agency - PEIMS, District s Audited Financial Statements and District records. 3

5 Historical Student Enrollment 22,000 21,500 21,000 Over the last 5 years, the number of students within the District has increased by 2,380 or an increase of 12.39%. 21,093 21,585 Student Enrollment 20,500 20,000 19,500 19,205 19,650 20,034 20,550 19,000 18,500 18, / / / / / /17 Source: Texas Education Agency - PEIMS and District records. 4

6 Full-Time Equivalent Personnel 3,500 3,000 Over the last 5 years, the District s full-time equivalent personnel has correspondingly increased by 386 to accommodate the additional 2,380 students attending schools within the District. Full-Time Equivalent Personnel 2,500 2,000 1,500 1, ,133 2, ,214 1,259 2,397 2, ,359 1,387 2,495 2, ,476 1, / / / / / /17 Teachers & Paraprofessional Staff Support Staff Administrators Auxiliary Staff (i.e. bus drivers, food service, secretaries, etc.) Source: Texas Education Agency - PEIMS, Texas Education Agency - AEIS and District records. 5

7 Full-Time Equivalent Personnel Per Student For year 2016/17, the District employed full-time equivalent personnel per student. Full-Time Equivalent Personnel Per Student / / / / / /17 Teachers & Paraprofessional Staff Support Staff Administrators Auxiliary Staff (i.e. bus drivers, food service, secretaries, etc.) Source: Texas Education Agency - PEIMS, Texas Education Agency - AEIS and District records. 6

8 Historical Tax Rates $2.25 $2.00 Over the last 5 years, the District s total tax rate has decreased by $0.38 cents. Property Tax Rate Per $100 Valuation $1.75 $1.50 $1.25 $1.00 $0.75 $0.50 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $0.25 $ / / / / / /17 Maintenance & Operations Tax Rate Interest & Sinking Fund Tax Rate Source: District s Audited Financial Statements and District records. 7

9 Historical Total Property Taxes For Maintenance and Operations and Voter-Approved Bonds For Various Appraised Home Values $4, $4, $3, $3, $3, $3, $3, $3, $3, Annual Property Taxes $3, $2, $2, $1, $2, $2, $2, $2, $2, $2, $1, $ $1, $1, $1, $1, $1, $1, $ / / / / / /17 $100,000 Appraised Home Value $200,000 Appraised Home Value $300,000 Appraised Home Value Note: Taxes are net of the $25,000 Residential Homestead Exemption. 8

10 Summary of Property Tax Cost Per School Day For Various Appraised Home Values Year 2016/17 $25.00 $21.63 In year 2016/17, a homeowner with a $200,000 Appraised Home Value and no children attending Pearland ISD paid approximately $13.76 of school property taxes for each school day. $20.00 A homeowner with a $200,000 Appraised Home Value and 2 children attending Pearland ISD paid approximately $6.88 of school property taxes per child for each school day. Cost Per School Day $15.00 $10.00 $13.76 This includes the cost of instructional programs, teacher salaries, instructional supplies, security, student transportation, extracurricular activities, facilities infrastructure/maintenance and bond payments. $10.81 $5.00 $5.90 $2.95 $6.88 $1.97 $4.59 $7.21 $1.47 $3.44 $5.41 $ Child 2 Children 3 Children 4 Children $100,000 Appraised Home Value $200,000 Appraised Home Value $300,000 Appraised Home Value Note: Taxes are net of the $25,000 Residential Homestead Exemption. Assumes a 180 school day year. 9

11 Composition of Total Assessed Valuation Year 2016/17 For year 2016/17, Single-Family Residential properties comprised 76.46% of the District s total assessed valuation and other property categories comprised 23.54%. Single-Family Residential 76.46% Multi-Family Residential 2.83% Vacant Lots, Acreage, Farm & Ranch Improvements 2.86% Oil, Gas & Minerals 0.02% Business, Commercial, Industrial, Inventory, Utilities, Other 17.83% Source: Texas Comptroller. 10

12 Historical Taxable Assessed Valuation and Taxable Value Per Student Enrollment $8 Billion $350,000 Taxable Assessed Valuation $7 Billion $6 Billion $5 Billion $4 Billion $3 Billion $2 Billion With the increase of the District s certified taxable values, the District s taxable value per student has increased from $296,073 to $337,907 over the last 5 years. $5,686,080,651 $296,073 $5,722,369,726 $291,215 $5,861,122,160 $292,559 $6,199,150,078 $301,662 $6,480,118,727 $307,217 $7,293,723,406 $337,907 $340,000 $330,000 $320,000 $310,000 $300,000 $290,000 $280,000 Taxable Value Per Student Enrollment $1 Billion $270,000 $0 2011/ / / / / /17 Taxable Assessed Valuation Taxable Value Per Student Enrollment $260,000 Source: Texas Comptroller, Texas Education Agency - PEIMS and District records. 11

13 General Fund and Debt Service Fund Revenue By Source Given the State funding system is structured to provide the District with an equalized dollar amount per student, the increase of the District s taxable value per student has increased the percentage of M&O revenues received from the State from 52.1% to 54.3% over the last 5 years. Year 2011/12 M&O Revenue by Source Year 2016/17 M&O Revenue by Source Federal (1.2%) Federal (1.4%) State (52.1%) Local (47.7%) State (54.3%) Local (44.3%) I&S Revenue by Source I&S Revenue by Source State (11.4%) State (A) (13.3%) Local (88.6%) Local (89.9%) (A) Includes payment from State received for lost tax revenues resulting from increase of residential homestead exemption in year 2015/16. Source: District s Audited Financial Statements and District records. 12

14 Total Revenues (All Governmental Funds*) By Source $225 Mil $200 Mil $175 Mil $162,840,067 $164,947,330 $185,149,106 $9,521,902 $191,652,494 $9,166,266 $205,404,215 $10,219,097 $212,318,286 $10,991,818 Revenues $150 Mil $125 Mil $100 Mil $75 Mil $9,391,999 $8,408,421 $87,478,517 $68,071,017 $70,729,224 $7,026,639 $6,461,034 $7,236,274 $90,243,942 $6,867,437 $99,372,913 $7,341,385 $95,054,025 $7,688,469 $50 Mil $25 Mil $78,350,412 $79,348,651 $80,912,413 $85,374,849 $88,470,820 $98,583,974 $0 2011/ /13 (A) 2013/ / / /17 Property Taxes Other Local & Intermediate Sources State Program Revenues Federal Program Revenues (A) For 10-month time period of September 1, June 30, Reflects initial year of District s change in fiscal year. *Excludes Capital Projects Fund. Source: District s Audited Financial Statements and District records. 13

15 Total Revenues (All Governmental Funds*) Per Student $12,000 $10,000 $8,479 $8,394 $9,242 $9,326 $475 $446 $9,738 $9,836 $484 $509 Revenues Per Student $8,000 $6,000 $4,000 $489 $428 $4,367 $4,391 $4,711 $3,544 $3,599 $366 $329 $361 $334 $348 $4,404 $356 $2,000 $4,080 $4,038 $4,039 $4,154 $4,194 $4,567 $0 2011/ /13 (A) 2013/ / / /17 Property Taxes Other Local & Intermediate Sources State Program Revenues Federal Program Revenues (A) For 10-month time period of September 1, June 30, Reflects initial year of District s change in fiscal year. *Excludes Capital Projects Fund. Source: District s Audited Financial Statements, Texas Education Agency - PEIMS and District records. 14

16 Total Expenditures (All Governmental Funds*) By Source $225 Mil $200 Mil $178,407,152 $190,308,171 $5,810,069 $202,653,403 $861,134 $25,606,996 $206,445,334 $644,922 $26,943,433 Expenditures $175 Mil $150 Mil $125 Mil $100 Mil $158,422,433 $5,223,083 $24,231,288 $149,361,881 $4,590,175 $17,772,676 $30,789,055 $31,479,921 $3,375,679 $956,465 $7,217,043 $23,165,985 $34,711,284 $3,455,607 $24,507,528 $36,677,047 $3,762,432 $41,955,849 $41,877,056 $3,977,831 $4,265,087 $75 Mil $50 Mil $94,803,328 $94,562,644 $109,857,233 $119,551,095 $130,251,593 $132,714,836 $25 Mil $0 2011/ /13 (A) 2013/ / / /17 Instruction & Instructional Support Central Administration District Operations Debt Service Other (A) For 10-month time period of September 1, June 30, Reflects initial year of District s change in fiscal year. *Excludes Capital Projects Fund. Source: District s Audited Financial Statements and District records. 15

17 Total Expenditures (All Governmental Funds*) Per Student $12,000 Expenditures Per Student $10,000 $8,000 $6,000 $4,000 $8,249 $272 $1,262 $1,603 $176 $7,601 $234 $904 $1,602 $49 $8,905 $360 $1,156 $1,733 $172 $9,261 $283 $1,193 $1,785 $183 $9,608 $9,564 $41 $30 $1,214 $1,248 $1,989 $1,940 $189 $198 $2,000 $4,936 $4,812 $5,484 $5,818 $6,175 $6,148 $0 2011/ /13 (A) 2013/ / / /17 Instruction & Instructional Support Central Administration District Operations Debt Service Other (A) For 10-month time period of September 1, June 30, Reflects initial year of District s change in fiscal year. *Excludes Capital Projects Fund. Source: District s Audited Financial Statements, Texas Education Agency - PEIMS and District records. 16

18 Unrestricted General Operating Fund Balance as a Percentage of General Operating Expenditures Unrestricted General Operating Fund Balance Per Expenditures 40.00% 30.00% 20.00% 10.00% Unrestricted General Operating Fund Balance is a reserve maintained to meet future expenses, which equaled approximately 2.04 months of the District s operating expenditures for year 2016/17. The Texas Education Agency and the bond rating agencies rely upon a school district s General Operating Fund Balance to determine financial management ratings % 18.73% 18.94% 17.81% 17.41% 17.00% 0.00% 2011/ /13 (A) 2013/ / / /17 (A) For 10-month time period of September 1, June 30, Reflects initial year of District s change in fiscal year. Source: District s Audited Financial Statements and District records. 17

19 Unlimited Tax Debt Service By Series Existing Bonds Approved By Voters $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 2017/ / / / / / / / / / / / / / / / / / / / / /39 Annual Bond Payments As of June 30, 2017 Principal $ 274,567,774 + Interest 115,502,488 = Total $ 390,315,335 Unlimited Tax Refunding & Schoolhouse Bonds, Series 1997 Unlimited Tax Schoolhouse Bonds, Series 2001B Unlimited Tax Refunding Bonds, Series 2011 Unlimited Tax Refunding Bonds, Series 2012 Unlimited Tax Refunding Bonds, Series 2013A Unlimited Tax Refunding Bonds, Taxable Series 2013B Unlimited Tax Schoolhouse Bonds, Series 2014 Unlimited Tax Refunding Bonds, Series 2014 Unlimited Tax Refunding Bonds, Series 2016 Unlimited Tax Refunding Bonds, Series 2016A Note: Although the District s fiscal year ends on June 30th, debt service payments reflect payments from September 1 through August 31 to match the receipt of tax collections and the District s budget. As such, the District s August 2016 debt payments are not portrayed in the graph above. Source: District s Audited Financial Statements and District records As of June 30,

20 Unlimited Tax Debt Service By Principal and Interest Existing Bonds Approved By Voters $30,000,000 $25,000,000 For each $1.00 of voter-approved bonds issued, the District pays $0.42 in interest. Annual Bond Payments $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 2017/ / / / / / / / / / / / / / / / / / / / / /39 Principal Interest Note: Although the District s fiscal year ends on June 30th, debt service payments reflect payments from September 1 through August 31 to match the receipt of tax collections and the District s budget. As such, the District s August 2016 debt payments are not portrayed in the graph above. Source: District s Audited Financial Statements and District records As of June 30,

21 Savings from District s Recent Bond Refunding Programs to Lower Interest Costs Pearland ISD has implemented 8 refunding programs to reduce the cost of voter-approved bonds which have generated more than $33.4 million of savings for District taxpayers over the last 11 years. Summary of Interest Cost Savings Bond Refunding Programs / Prepayment of Bonds Issue Series Refunded Principal Amount Refunded Total Savings Unlimited Tax Schoolhouse & Refunding Bonds, Series C, 2002, 2003A, 2004 $ 30,365,000 $ 869,349 Unlimited Tax Refunding Bonds, Series , 1998, 2001C 32,350,000 1,900,266 Unlimited Tax Refunding Bonds, Series A, ,790, ,509 Unlimited Tax Refunding Bonds, Series A, 2004, 2005A 65,040,000 4,142,007 Unlimited Tax Refunding Bonds, Series 2013A 2001C, 2003A, 2005A, ,020,000 1,031,258 Unlimited Tax Refunding Bonds, Taxable Series 2013B 2005, 2005A 38,155,000 4,911,897 Unlimited Tax Refunding Bonds, Series , 2005A, ,350,000 2,745,793 Unlimited Tax Refunding Bonds, Series ,080,000 9,236,931 Unlimited Tax Refunding Bonds, Series 2016A 2007, 2007R 45,020,000 7,555,568 Prepayment of Series 2007 Bonds - February ,220, ,000 Totals --- $ 317,390, $ 33,461, Source: District records. 20

22 Summary of Unlimited Tax Debt Outstanding By Series As of Fiscal Year Ended June 30, 2017 No. Issue Description Purpose 1 Unlimited Tax Refunding & Schoolhouse Refunding at a lower Bonds, Series 1997 interest rate, etc. and capital improvements 2 Unlimited Tax Schoolhouse Bonds, Series 2001B Original Principal Amount Outstanding Principal Total Outstanding Debt Service Outstanding Principal Per Capita Outstanding Debt Service Per Capita Final Maturity Date Total Proceeds Received Spent Proceeds Uns pent Proceeds $27,512, $192, $640, $1.84 $ /15/2018 $27,756, $27,756, $0.00 Capital Improvements $22,500, $22,500, $29,353, $ $ /15/2025 $22,500, $22,500, $ Unlimited Tax Refunding Bonds, Series 2011 Refunding at a lower interest rate, etc. 4 Unlimited Tax Refunding Bonds, Series 2012 Refunding at a lower interest rate, etc. $8,740, $8,690, $11,131, $83.00 $ /15/2027 $8,588, $8,588, $0.00 $62,845, $59,420, $82,400, $ $ /15/2029 $73,040, $73,040, $ Unlimited Tax Refunding Bonds, Series 2013A 6 Unlimited Tax Refunding Bonds, Taxable Series 2013B Refunding at a lower interest rate, etc. Refunding at a lower interest rate, etc. $15,490, $12,825, $20,520, $ $ /15/2029 $18,134, $18,134, $0.00 $38,155, $34,290, $41,957, $ $ /15/2029 $41,328, $41,328, $ Unlimited Tax Schoolhouse Bonds, Series 2014 Capital Improvements $30,540, $30,180, $47,949, $ $ /15/2039 $34,469, $31,897, $2,572, Unlimited Tax Refunding Bonds, Series 2014 Refunding at a lower interest rate, etc. 9 Unlimited Tax Refunding Bonds, Series 2016 Refunding at a lower interest rate, etc. $28,655, $24,180, $30,815, $ $ /15/2029 $32,820, $32,820, $0.00 $41,335, $41,335, $70,882, $ $ /15/2032 $50,998, $50,998, $ Unlimited Tax Refunding Bonds, Series 2016A Refunding at a lower interest rate, etc. $42,200, $41,795, $54,419, $ $ /15/2032 $45,741, $45,741, $ Unlimited Tax School Building Bonds, Series 2017 (Sold July 6, 2017) Capital Improvements $105,510, $105,510, $179,062, $1, $1, /15/1942 $122,583, $11,142, $111,441, Source: District s Audited Financial Statements and District records. 21

23 Tax-Supported Debt Obligations At Fiscal Year End and As a Percentage of Taxable Assessed Valuation Bond Principal Outstanding At Fiscal Year End $500 Mil $400 Mil $300 Mil $200 Mil $100 Mil 5.54% 5.31% 5.00% 5.02% 4.51% 3.77% $314,790,000 $303,635,000 $311,255,000 $293,220,000 $292,025,000 $275,015, % 5.00% 4.00% 3.00% 2.00% 1.00% Bond Principal Per Taxable Assessed Valuation $0 2011/ / / / / / % M&O-Supported Debt I&S-Supported Debt Note: The District does not have any debt payable from M&O taxes. Source: District s Audited Financial Statements and District records. 22

24 Inflation-Adjusted Tax-Supported Debt Per Capita $5,000 Reflects an estimate of District s principal amount of tax-supported debt outstanding per capita, with years 2011/ /16 adjusted by rate of inflation portrayed by the Consumer Price Index. Bond Principal Per Capita $4,000 $3,000 $2,000 $3,593 $3,335 $3,099 $3,203 $2,900 $2,627 $1,000 $0 2011/ / / / / /17 Inflation-Adjusted M&O-Supported Debt Per Capita Inflation-Adjusted I&S-Supported Debt Per Capita Note: The District does not have any debt payable from M&O taxes. Source: District s Audited Financial Statements, 2010 U.S. Census (Interpolated), Bureau of Labor Statistics and District records. 23

25 Inflation-Adjusted Tax-Supported Debt Cost Per Capita Principal and Interest In Each of the Last 5 Years Local Taxpayer Cost Per Capita - Tax-Supported Debt Payments $400 $300 $200 $100 On a per capita basis, reflects an estimate of local property taxes used to fund the District s annual principal and interest requirements of its tax-supported debt, with years 2011/ /16 adjusted by rate of inflation portrayed by the Consumer Price Index. $239 $233 $227 $233 $233 $250 $0 2011/ / / / / /17 Note: Debt payments represent District s voter-approved bonds payable from a levy of its I&S tax rate. Source: District s Audited Financial Statements, 2010 U.S. Census (Interpolated), Bureau of Labor Statistics and District records. 24

26 Contact Information and Links to Additional Resources Main Office Contact Information: Physical and Mailing Address: 1928 North Main Pearland, Texas Phone: (281) For additional information regarding this report, please contact: Jorgannie Carter Chief Financial Officer Phone: (832) Links to Additional Resources: