Gonzales ISD trustees approve paying off portion of district’s debt

The Gonzales ISD School Board met for a special called meeting Tuesday, June 20 at the GISD administration building. 

One of the major agenda items was authorizing the defeasance and redemption of a portion of the district's outstanding Unlimited Tax School Building Bonds, Series 2015A. The measure was approved by the board Tuesday night.

GISD Chief Financial Officer Amanda Smith recommended the board pay off the district’s debt, and she explained in the presentation to the board.

“Defeasance is just a fancy word that means paying off our debt early. Just like with our personal debt, or mortgages or car loan, we can make extra payments and apply it toward the principal balance of the loan interest costs over the life of those loans,” Smith said. 

The reason why Smith brought this to the board, she said, is that it saves the cost over the life of the loan, and because of that, it’ll generate cost savings.

“The added benefits for doing a bond defeasance, or an early call, is tax rate stability, and then it creates capacity for any potential future needs that we have. And by that, I mean our debt payments would be smaller in the future, so we would be able to issue additional debt should the need arise to do so,”
Smith said.

Smith explained why the district cannot sell as many bonds as they want to and raise the debt rate indefinitely due to being capped at how much debt the district can issue. 

“Our I&S tax rate has to maintain at 50 cents or below in order for the district to issue debt. So, by paying off some of our debt early, you can make room for us to issue additional debt in the future for any future needs that we may have,” Smith said. 

Smith makes it clear this is for the debt service fund, and not the general fund.

“While we're still far away from our 50-cent limit at 6.98 cents, it is a good idea to be constantly re-evaluating the market, and what our debt looks like, so that we can just manage that all the time,” Smith said.

In other board business, the board approved the following agenda items:

• approved, by a 6-1 vote, the Gonzales ISD District of Innovation Plan Amendment of a $7,000 increase to state-based pay.

The board went over the amendment that was pushed from the June 12 meeting. Smith stated they are requesting a sentence be removed from the plan that “teachers employed on a local district certification be issued non-Chapter 21 contracts and be placed on a state-based salary schedule.”

Smith added this does not effect the end date of the district’s current innovation plan, and it’ll impact 10 teachers with their bachelor’s degrees, but who are not fully certified.

The board was presented two options; the first is to pay non-certified teachers with a bachelor’s degree $5,000 above state base pay for starting teachers, which is $33,660. The second is to pay them $7,000 above state base.

“To refresh your memory, there is currently $16,340 difference between the two. Under the $5,000 is just over 30 percent of that number, and the $7,000 almost 43% of that number.”

GISD Superintendent Dr. Elmer Avellaneda said the reason the district is amending the sentence to add those monies to the state base pay is because it has remained at $33,660 for the last three years, he said.