FBISD Maintains AA Bond Rating

Both Standard and Poor’s and Fitch Ratings have affirmed Fort Bend Independent School District’s “AA” bond rating, noting that the district’s recent reduction in force “was necessary to allow the school district to eliminate about 470 positions to close an estimated $22 million budget gap.”

Out of a total of 9,500 full-time positions in the district, officials announced earlier this month that a total of 470 positions would be eliminated.

The most current information released indicated that the district reduced the number of teachers let go by 221 after placing employees in positions that have became available due to vacancies, resignations and retirements.

FortBendNow.com requested the most current numbers, but was told an Open Records Request would have to be submitted. By law, the district has 10 business days to respond to such a request, or to appeal to the Texas Attorney General’s Office.

The district has operated on a deficit budget for the past three years, and estimates show that at the current pace the district’s $98 million General Fund could be wiped out by 2013.

Of the 470 jobs, the district identified 195 certified teaching positions along with 80 certified non-teaching professional positions, and 195 non-certified positions for reduction. Non-certified positions include all other district positions. 

One hundred of the identified teaching positions relate to special education. Although the district’s special education population has declined by more than 900 students in the last 10 years, the number of teachers in the program has increased by 176.

FBISD Board of Trustees President Bob Broxson said that due to FBISD’s declaration of financial exigency, which allowed the district to begin the reduction in force, rating agency’s were “quite anxious to hear how we were handling our finances.”

“Over the past three years, the district has been proactively approaching the budget issues,” said Broxson. “Most of this has been through conservation of resources, like vehicle fuel and energy consumption at district facilities. In addition, we have also cut budgets across the board in every department. The cost saving activities have allowed us the ability to avoid taking actions that involved employees, which represent approximately 88 percent of the total budget.”

Broxson said that although the elimination of employees was the catalyst for the district maintaining the AA bond rating, it was a last resort.

“This year, we declared Financial Exigency because it was the last option we had to address the budget issues we have been fighting,” said Broxson. “Because we took these proactive steps we were able to show the ratings agencies that we had a means to deal with these issues, and it was received as a positive in their debt rating process. This declaration was a hard decision for the board because of the impact it had on our employees. But from the perspective of the ratings agencies, it was a move that was perceived as positive.”

The rating allowed the district to refund approximately $174 million in outstanding bonds from the 2010 bond series at an average rate of 3.57 percent. According to Jim Brooks, representing Southwest Securities, Inc., the district’s financial advisor, that is one of the lowest rates seen for school bonds in “many, many years.”

The rate is expected to save more than $12.8 million in future interest costs.

The district expects to have their first balanced budget in three years, mainly through savings realized through the reduction in force.

The district reduced the deficit by $19,802,069 though the RIF, $325,000 through outsourcing lawn care, $600,000 through eliminating after-school activity transportation, $1,600,000 through route changes that included increasing the distance to bus stops, $190,000 by discontinuing UIL student insurance and $300,000 by compressing the summer work week to four days.