Debt Management

The 84th Legislature passed HB 1378 to increase the transparency of local government debt.  As a result, the District must annually compile their debt obligation data from the preceding fiscal year and post the information on the District’s Web site.

Debt Transparency Report HB1378

Debt Repayment Schedule

Debt Repayment Graph

Comparisons to Other Districts

Official Statements

Bond Ratings
Moody’s Bond Rating –Aaa
Fitch Bond Rating AAA

Round Rock ISD maintains a conservative approach in the administration of its debt and has implemented strategies to effectively manage the impact of debt. For a growing district like Round Rock, the District balances the need for additional facilities for a growing student population as well as maintaining the existing investment in facilities and equipment, with the impact on taxpayers. The District employs the following practices:

Rapid Repayment of Debt
While state law allows the financing of debt over a maximum period of 40 years, the maximum maturity on debt issued by Round Rock has been 25 years. The District’s principal debt outstanding as of June 30, 2016 is $806,725,000. The current debt schedule is structured to pay off 54% of principal and interest in the next ten years, which is a more aggressive repayment schedule than similar school districts.

Repayment of Debt Within Useful Life of Asset
When planning for a bond sale, District officials work with the District’s bond financial advisor, employed by a public finance firm. New debt is layered over existing debt in an effort to maintain an amortization schedule that is aggressive in repayment of debt without over-burdening taxpayers. Debt levels over the upcoming five years are already established with existing debt when a sale takes place. However, in accordance with the Board approved Fiscal and Budgetary Strategy, the debt associated with technology equipment is layered over existing debt to ensure repayment over five years, the useful life of computers and related equipment. This “front loading” does extend the weighted average maturity on bonds associated with building construction and other projects, but the maximum maturity of 25 years is less than the typical 30 or 40 year maturity exercised by other school districts. This debt structuring process ensures that taxpayers are not paying for technology beyond its useful life.

Financial Performance
Round Rock ISD is the only Texas school district with a AAA credit rating by Fitch Ratings and one of only seven districts in the state of Texas to be issued a Aaa credit rating by Moody’s Investors Service based, in part, on its prudent budgetary planning and financial condition. While most of the District’s bond issues are guaranteed by the Texas’ Permanent School Fund (PSF), an exemplary underlying rating can impact the interest rate on bonds, achieving a lower borrowing cost for the District.

Due to enrollment growth and the need for additional student seats, the District has incurred sizable amounts of debt in the last five years. However, Round Rock continues to have one of the lowest debt per student ratios and interest to principal ratios when compared to its peers. In addition, the use of Build America Bonds (BABs), a debt product available through federal stimulus legislation, will account for savings in excess of $32 million over the twenty-five years of its issuance.

Long-Term Planning
Although facing annual enrollment growth, Round Rock ISD has not over-burdened taxpayers in its long-term planning of facilities. In a press release dated September 13, 2012, Fitch Ratings stated that “School officials have not over-built, relying on portable structures to supplement permanent facilities….”

The conservative philosophy of the District in its debt administration, its financial performance and resulting credit rating, and shortened maturity schedule saves millions of dollars for taxpayers over the long run. The continued use of these strategies will be necessary as the District continues to grow.

Bond Refundings

The District considers accelerated retirement and restructuring of its outstanding debt when financially advantageous or beneficial. Bond refunds are considered in order to achieve interest cost savings or to remove or change burdensome bond covenants or restructure the stream of debt service payment. The District refunded bonds in 2005,2009,2010 and 2015. The savings to the District taxpayers was a total of $20.9 million dollars.