Board Notes: October 26, 2021

BOARD NOTES – Oct. 26, 2021

Workshop Items

Discussion of Bond Refunding/Refinancing Opportunity

Dr. Scott Niven, chief financial officer, provided an annual review of the district’s outstanding bonded debt for refunding opportunities that will save the taxpayers money.  Mr. Josh McLaughlin, BOK Financial Securities, reviewed options for bond sales that are eligible to be refunded and save tax dollars along with options for removing the 2005 and 2006 bond swap agreements included in our portfolio. Since 2005, the district has saved the district’s taxpayers $274.8 million through the refinancing of debt based on declining interest rates.

More recently, The District has implemented two “synthetic fixed-rate debt structures” to reduce the District’s interest cost and as of Sept. 30, 2021, these structures have reduced the District’s interest cost by more than $10.21 million. Important to note the savings have been accrued while the District's total tax rate has decreased by 17.8 cents over the last three years.

Denton ISD maintains independent bond ratings of “AA” by both Fitch Ratings and S&P Global Ratings because of the organization’s history of paying off debt early. The District has strategically incorporated variable rate put bonds within its debt portfolio since year 2012 – lowering its borrowing cost by more than $35.8 million in comparison to the sale of fixed rate bonds. As summarized below, the District’s current interest rates on its existing variable rate bonds are 0.41% and 1.53%. The District has implemented 10 refunding programs and prepaid $58.14 million of existing bonds, generating more than $228.7 million of savings.

Based upon prevailing market conditions, the Preliminary Financing Plan produces a net positive cash flow impact to Denton ISD’s debt portfolio. 

  • Component No. 1 – Bond Prepayment: DISD prepays $9,190,000 of its Variable Rate Unlimited Tax School Building Bonds, Series 2014-B on February 1, 2022, saving taxpayers $7,352,000 in future interest costs.
  • Component No. 2 – Termination of Existing Swap Agreements

Issuance of Series 2021-A Bonds: 

Refunds existing Series 2005-A Bonds and terminates the associated 2005 Swap Agreements –

Increases DISD’s future bond payments by $1,074,340, but the District still achieves a total estimated cash flow savings of $3,089,568 since the inception of the 2005 Swap Agreements.

Issuance of Series 2021-B Bonds and Taxable Series 2021-C Bonds: 

Refunds existing Series 2006-B Bonds and terminates the 2006 Swap Agreement – Results in a $506,665 reduction in the District’s future bond payments, with the District achieving a total estimated cash flow savings of $6,552,923 since the inception of the 2006 Swap Agreement.

With the termination of the Swap Agreements, Denton ISD is no longer subject to counterparty risk, termination risk, basis risk, tax event risk, etc. as the District would be left with traditional fixed rate bonds.

  • Component No. 3 – Potential “Taxable” Advance Refunding

Opportunity: Refunds certain of DISD’s existing Series 2014-A, Series 2015, and Series 2015-A Bonds at a lower interest rate, which would produce a savings of $5,839,643 based upon prevailing market conditions.

Since Denton ISD only has one opportunity to complete this particular refunding program, we would recommend a minimum debt service savings of $7,000,000 be achieved before moving forward with this opportunity. Denton ISD would still be able to prepay additional bonds during year 2022/23 to maintain its current 48-cent I&S tax rate.

 

Discussion and Review of District of Innovation Renewal

Deron Robinson, general counsel, explained that for Denton ISD to continue to remain a District of Innovation, it is required to renew the District of Innovation plan every five years. On September 1, 2021, the Denton ISD Educational Improvement Council passed a motion to amend the current Denton ISD District of Innovation Plan by adding American Sign Language as an exception to the certification requirements of Texas Education Code Section 21.003 and 21.044. This amendment does not technically add an exemption to the District of Innovation Plan, it does add an area excepted under these exemptions which was not previously discussed. Accordingly, the Denton ISD Board of Trustees will consider this proposal for approval at the meeting on November 16, 2021. New District of Innovation language will include:

Denton ISD believes school district leadership should decide what is best for its students in determining the candidate best suited to teach certain courses, including American Sign Language, and career and technical education (CTE) courses; science, technology, engineering, and mathematics (STEM) courses; dual credit coursework; etc. By claiming exemption from Sec. 21.044 the district shall have the right to recruit individuals from certain skill sets including individuals with expert knowledge of sign language, trades, industries, and vocations with industry knowledge and real-world experience and consider qualifications based on experience, industry certification, etc. District leadership including principals, CTE administrators, human resource department members, etc. shall determine whether it is in the best interest of its students to certify individuals based on these factors rather than appeal to the Commissioner of Education as stated in Sec. 21.055. Further, the district shall establish local criteria for training and locally certifying individuals rather than adhere strictly to mandates outlined in Sec. 21.053. In doing so, parental notification of “inappropriately certified or uncertified teachers” under Sec. 21.057 would no longer be necessary. Regardless of whether any adjustments or changes are made to the certification laws, Denton ISD believes this issue to be a local decision as opposed to a state mandate.

 

Discussion of Teacher Retirement System (TRS) ActiveCare 

Chris Bomberger, executive director of child nutrition and benefits, presented to the Board of Trustees, for review and discussion, an overview of the requirements of the Texas Senate Bill 1444 and the implications for the Teacher Retirement System ActiveCare Insurance for the 2022-2023 plan year. The district can choose to stay with TRS and do nothing but needs to make that decision by Dec. 31, 2021. If the district chooses to “opt-out” then must remain out for five years. The district can re-evaluate the decision and choose to opt back in by Dec. 31 of each subsequent year.

Senate Bill 1444 was approved in the summer of 2021. The following outlines actions within the bill:

  • School Districts cannot offer alternate insurance plans alongside TRS-ActiveCare plans for a plan year “on or beginning” after September 1, 2022
  • Districts can choose to leave TRS-ActiveCare starting September 1, 2022
  • Districts must notify TRS-ActiveCare by December 31, 2021; Districts may choose to opt-out of TRS-ActiveCare each year
  • Districts would then will not be eligible to rejoin TRS ActiveCare for five years
  • If not participating or rejoining, must remain in TRS-ActiveCare for five years

    

Report Items   

Winter Storm Update

Chris Bomberger, executive director of risk management, updated the Board of Trustees about the Winter Storm recovery efforts. This report outlines the financial impact of the storm and the current status of the process to rebuild and resupply Denton ISD facilities. Beginning on or about February 10, 2021, a winter storm warning was issued across the North Texas region, including Denton County. A total of 11 days spanned between the first Winter Weather Advisory issued on February 9th to when the last Hard Freeze Warning expired on or about February 20th. 

At the time of the event, Denton ISD had various bond construction projects in progress throughout the district and had contracted with Balfour Beatty to complete some of those projects. To expedite the recovery process, Denton ISD utilized its existing contract with Balfour Beatty. A TASB approved vendor, Balfour Beatty was ideally situated to address the storm damage on a timely basis and was able to issue a job order contract to address insurance claim- related repair work. The majority of the temporary and permanent repairs were able to be expedited during a two-week period (Spring Break and remote/distance learning week). The remaining repairs were completed during times that did not interrupt normally scheduled hours of operation, including the summer break. Due in part to supply chain issues and the many items that have been ordered and not yet received, work to finalize the claim is ongoing. Final construction summaries for each location have been submitted to TASB for review. Contents are being processed and will be evaluated and completed in November. An effort to close the claim will continue through January 2022.

 

Attendance Reporting Period 1 - 2021-2022  

Angela Ricks, director of student support services, provided campus and district ADA percentages for the first reporting (nine-week) period of the 2021-2022 school year and compared data to prior years. The report also identified current truancy prevention measures being used on Denton ISD campuses to increase student attendance.

There are 31 instructional days in this 1st reporting period. Denton ISD’s ADA percentage for the first reporting period is 92.84%. This is a significant decrease from previous school years as we typically see 1st reporting period ADA percentages above 97%. Many of the student absences in this reporting period are related to COVID-19 illnesses or quarantine. Unlike last school year, this school year students are not able to participate in remote learning unless they are enrolled in the K-8 Virtual Academy.

Adkins had the highest attendance percentage for elementary campuses in Denton ISD at 95.72%. Rodriguez had the highest attendance percentage for middle school campuses in Denton ISD at 94.11%. Guyer had the highest attendance percentage for high school campuses in Denton ISD at 93.27%. EE (Early Childhood Education) had the highest ADA % at 94.64%, followed by 5th grade with 94.21%. Pre-K had the lowest ADA % at 90.80%, followed by 12th grade with 91.29%.

 

Head Start Annual 644 Financial Compliance Report

Cathi Robbins reviewed the Head Start Annual 644 Financial Compliance Report summarizing the Ann Windle School for Young Children’s Head Start Administrative Requirements and Standards from section 644 of the Head Start Act.

Annually, each Head Start Agency must report the following information from the most recently concluded fiscal year:

  • The total amount of public and private funds received and the amount from each source.
  • An explanation of budgetary expenditures and proposed budget for the fiscal year.
  • The results of the most recent review of the financial audit.

AWSYC is funded by a Federal Grant in the amount of $1,646,011. The award for 2020-2021 reflects a COLA (cost of living adjustment) increase over the previous year in the amount of $23,876, $58,580 Quality Improvement increase, and Covid 19 Supplemental funds of $169,610. The grant requires a local match of 20% or $367,727. A total from all sources during the 2020-2021 school year for matching dollars is $705,493. The decrease in match was due to the impact of Covid-19.

 

COVID Report

Susannah O’Bara, Assistant Superintendent provided the Board with the most up to date COVID case data from the Denton County Public Health Department. Denton ISD’s will remain in constant communication with DCPH regarding guidance and protocols for the health and safety of our community.

 

Recognitions

A pair of Denton ISD educators named Texas Council of Social Studies Teachers of the Year. The Texas Council of Social Studies (TXCSS) educators annually honor outstanding teachers and social studies educators. This year, of the five state-wide winners selected by their peers, two are Denton ISD educators. Morgan Howell, U.S., and World History teacher at Braswell High School is the 2021 Outstanding High School Teacher of the Year. 

Anna Braudrick, 6th grade World Contemporary Societies, 7th grade Texas History and 8th grade U. S. History at Lester Davis School DAEP is the 2021 Betty Barringer Middle School Teacher of the Year. 

Mrs. Braudrick is in her 23rd year as a sixth grade World Contemporary Societies, seventh grade Texas History and eighth grade U.S. History teacher at Davis School. Because of her passion for public education and love for student learning in Denton ISD, Mrs. Braudrick is featured in our educator spotlight video of the month.