2011 TASA/TASB Presentation


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2011 TASA/TASB Presentation

  1. 1. Holding an Effective Bond Election
  2. 2. Outline• Bond Election Analysis – deciding to call an election• Bond Election Campaign – Once The Board has voted• Post-election - next steps
  3. 3. Bond Election Analysis 0 1 2 3 4 5 6 7 8 9 10 11 12 13 Months Do we have a need? Needs Assessment Board creates needs committee Needs committee makes recommendations Board reviews needscommittee recommendations… Board considers approval of bond election Financial Impact StudyBoard approves bond election Bond election strategy implemented Bond election
  4. 4. Bond Election Analysis “Keys to bonds passing” case study*• Board and administration established diverse citizen task force• Disseminated info that focused on kids and community• Unanimous support of board• Keeping school design simple• Spending time getting “yes” voters out, not trying to change “no” voters’ minds*School Bond Case Study (by Holt, Wendt, and Smith – 2006)
  5. 5. Bond Election AnalysisImportant Steps• Indentifying district needs and projects.• Identifying the financial impact to the community.• Creating a strategic election campaign. Holding an Effective Bond Election 5
  6. 6. Bond Election AnalysisMay and November pass/fail election results 2006-2010:May Bond Election Results (by # of Elections) November Bond Election Results (by # of Elections) 25% 33% 67% 75% Passed Failed Passed Failed
  7. 7. Bond Election AnalysisMay and November election amount ($) results2006-2010:May Bond Election Results (by Par Amount) November Bond Election Results (by Par Amount) 18% 17% 82% 83% Passed Failed Passed Failed
  8. 8. Bond Election Analysis Historical Bond Election Results 9,000,000,000 8,000,000,000 7,000,000,000 6,000,000,000Total Bond Election Par Amount 5,000,000,000 4,000,000,000 3,000,000,000 2,000,000,000 1,000,000,000 - 1-May-06 1-Nov-06 1-May-07 1-Nov-07 1-May-08 1-Nov-08 1-May-09 1-Nov-09 1-May-10 1-Nov-10 Passed Failed
  9. 9. Bond Election AnalysisTexas ISD bond election results vs. macroeconomicmarket conditions: • Success rate of bond elections decline from 85% in 2007 to 60% in 2010 • Number of elections decreased from 168 in 2007 to 81 elections in 2009. However, elections increased to 110 in 2010 • May 2011 results – 64 Elections – 72% passed
  10. 10. Bond Election AnalysisIndentifying district needs and projects:• A well thought-out plan – School Site – Structural and Mechanical – Maintainability – School Safety and Security – Educational Adequacy – Environment for Education• Specialized projects – needs vs. wants• Location• Who assesses district needs?• Community surveys
  11. 11. Bond Election AnalysisDevelop accurate cost projections:• Construction team• Cost overruns?• Competitive factors?• District’s best interests Holding an Effective Bond Election 9
  12. 12. Bond Election AnalysisIdentifying the financial impact to the community: • Build financial team • Review market conditions • Project tax implication • State formulas • Financial team
  13. 13. Bond Election AnalysisWho is on my financial team?• School Board• Superintendent• Business Manager/CFO• Architect• Construction Consultants• Financial Advisor• Underwriter
  14. 14. Bond Election Analysis Market conditions and their effects on tax rates • ISDs tax rate: – Assessed Valuation (“AV”) within the district – Borrowing amounts and costs Effect on Tax RateInterest Rates Higher Interest Rates Lower AV Increases AV Decreases Up Down Down Up
  15. 15. Bond Election Analysis Market conditions and their effects on tax rates continued • For example, assuming that a district recently issued $50 million of bonds with level debt service over 30 years, the District’s tax rate could be expected to increase by approximately $0.33 per $100 (at current market rates) of Assessed Valuation.1 Tax Rate Changes - Assuming $50 MM Bond Issue1 Assessed Value Assessed ValueRates Higher by 2% Rates Lower by 2% Increases 10% Decreases 10% $0.40 $0.26 $0.30 $0.36 1 Assumes total assessed valuation of $1 billion.
  16. 16. Bond Election AnalysisAccurate tax impact projections – What are the chief variables that will impact the tax rate? – What are current market conditions? – Are there innovative or cost saving financing options? – How do I know I have the right team?
  17. 17. After the Board has voted to call an election…BOND ELECTION CAMPAIGN
  18. 18. Bond Election CampaignHow are you going to succeed?• Know who is on your team• Know your voters• Clear communication• Think outside the box
  19. 19. Bond Election CampaignWho’s on yourElection team?• Board (“cohesive”)• Superintendent• District staff• Community leaders• Financial advisor, architect, consultants• Legal Council
  20. 20. Bond Election CampaignWho’s on your team?• The perception “inside”• Does each team member know their role?• How will information be communicated?• Is everyone aware of the rules?
  21. 21. Bond Election CampaignIdentify your voters• The perception “outside”• Factors that can impact the minds of your voters• Interviews/Surveys
  22. 22. Bond Election CampaignEvaluate organized opposition:understand bond opponents• Determine accuracy of opposition points and develop response• Meet with opponents to create a common ground• Bring opponents into the “core” team
  23. 23. Bond Election CampaignCommunicating with VotersUnderstanding your district’s role*:• Can a school district take an official position in an election?• Can a school district communicate anything about an election?• What about district staff and elected officials?• It’s complicated…*source: TASB legal services
  24. 24. Bond Election CampaignCommunicating with VotersUnderstanding your district’s role:Q. Can a school district take an official position in an election?A. No, not if public funds will be used directly or indirectly to reach or disseminate the position. School district employees and officials cannot knowingly use public funds, directly or indirectly, for political advertising to advocate for or against a candidate or measure that will appear on a ballot.
  25. 25. Bond Election CampaignCommunicating with VotersUnderstanding your district’s role:Q. May public funds be used to communicate anything about an election?A. Yes, public funds can pay for the dissemination of factual information, but not advocacy. Factual information includes information about what is at stake in a bond or tax election, as well as information about the conduct of the election (date, polling sites, etc.).
  26. 26. Bond Election CampaignTexas Election Code § 255.003Unlawful Use of Public Funds for Political Advertisinga) An officer or employee of a political subdivision may not knowingly spend or authorize the spending of public funds for political advertising.b) Subsection (a) does not apply to a communication that factually describes the purposes of a measure if the communication does not advocate passage or defeat of the measure.c) A person who violates Subsection (a) commits an offense. An offense under this section is a Class A misdemeanor.
  27. 27. Bond Election CampaignDON’T “Advocate”A communication that “contains a clear request for thereader to support” the measure• Vote for . . .• Support . . .• Defeat . . .• Reject . . .
  28. 28. Bond Election CampaignDO “Educate”(Objectively Verifiable Facts Only)• Student capacity• Growth rates• Age/condition of facilities• Projects to be funded with bonds• Cost of projects• Tax rate effect• Voting dates and polling places
  29. 29. Bond Election CampaignUnderstanding your district’s role:Q. May board members use their own time and money to campaign for candidates and causes?A. Yes, public officials, who are acting independently, without the use of public funds, have a free speech right to engage in political advocacy. This includes the use of private emails and involvement with political action committees.
  30. 30. Bond Election CampaignUnderstanding your district’s role:Q. Are school employees permitted to advocate for or against particular candidates or measures?A. Not on work time or using district resources, including office supplies and computer equipment.
  31. 31. Bond Election CampaignUnderstanding your district’s role:Q. Is the superintendent ever “off the clock” and free to advocate as a private citizen?A. Advocacy by a superintendent on a school district election matter may appear to others to be an official statement by the district and thus a use of district funds. A superintendent should speak only about the factual purposes of an election measure so as not to encourage, promote, or imply that listeners should vote for or against the measure.
  32. 32. Bond Election CampaignCommon Sense Approach• Educate, Don’t Advocate• Don’t Stir People Up! It’s COMPLICATED… Don’t try this without Legal Counsel!!!
  33. 33. Bond Election CampaignPresentations• Factual• Short (5-10 slides)• Focus on District successes• Bond project summary
  34. 34. Bond Election CampaignMedia• Brochures and fliers• Website• Social Media• Ballot language Don’t try this without Legal Council!!!
  35. 35. Bond Election CampaignThink OUTSIDE the box
  36. 36. Bond Election CampaignThinking outside the box examples:• Put bond opposition on your team• Organized non-district staff support• Catchy slogan• Pulpit presence• Senior involvement (i.e. Pancake Night)• Captive audience – Fall Bazaar – Choir/Band Concert – Baseball/Football games/playoffs• Early voting locations• Awareness of other local Gov’t entities elections
  37. 37. POST ELECTIONYour election has passed – now what?
  38. 38. Post Election• Canvas Election• Construction Phases• Sell Bonds• Receive and Invest Bond Proceeds
  39. 39. Post ElectionConstruction Delivery Methods Five Methods of Construction: * Competitive Sealed Bid * Competitive Sealed Proposal * Construction Manager-Agent * Construction Manager-At-Risk * Design/Build - Job Order ContractsTexas Education Code: Chapter 44 – Fiscal Mgmt * Board must determine delivery method
  40. 40. Post Election• Underwrite Bonds – Firm that markets and sells your bonds to investors• Different firm than your Financial Advisor Firm• Takes on Underwriting risk in the event of no investors
  41. 41. Post ElectionInvesting Bond Proceeds• Set up separate bond investment account• Determine spend-down estimates, may invest in term investments• Options include: Treasuries, Agencies, CDs, Pools
  42. 42. Wrapping up…Effective elections have common factors:• Clearly identified needs• Trust of the community• Unified board members• Community leaders and grass roots support• Panel of experts helping with the election
  43. 43. Questions?• Jeff Clemmons, TASB (800) 580-8272 extension 2220 jeff.clemmons@tasb.org• Kara Ardis, First Public Subsidiary of TASB (800)558-8875 kara.ardis@firstpublic.com• Ron Greiner, Government Capital Corp. (800) 883-1199• Rudy Segura, Jr., McCall, Parkhurst, &Horton LLP (214) 754-9268
  44. 44. DisclosureThis material is for informational purposes only and is not intended to be an offer to sell or a solicitation of an offer to buy any security. Computational information is subject to change, is for hypothetical purposes only and does not guarantee or predict future results. For securities discussed herein, First Public may act as an underwriter or agent. First Public is the primary distributor of a local government investment pool, Lone Star Investment Pool. The Lone Star Information Statement should be read carefully before investing. Investors should consider the investment objectives, risks, charges and expenses associated with this or any security prior to investing. Investment in Lone Star Investment Pool is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and although Lone Star seeks to preserve the value of the investment at a fixed share price, it is possible to lose money by investing in Lone Star. For further information or for an Information Statement contact First Public at (800) 558-8875.