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LISD Continues to Reduce Remaining Debt Outstanding

LISD Continues to Reduce Remaining Debt Outstanding
Posted on 05/25/2017

The Leander ISD Board of Trustees has changed the debt profile for the district by use of local control. The debt profile was a key factor resulting in Standard and Poor’s, a national credit agency, upgrading LISD from a “AA-” bond rating with a stable outlook to “AA” with a stable outlook.

The Board has utilized sound financial management practices that have allowed LISD to maintain the tax rate the last four years, apply excess tax collections to retire debt early, and leverage well-timed and well-structured refundings to achieve a cumulative savings to local taxpayers of $469 million in less than two years.

LISD Chief Financial Officer Lucas Janda said, “In a fast-growth local community like LISD, the balance between retiring debt early, ensuring capacity to fund student needs, and limiting the tax impact on taxpayers can be quite difficult when coupled with future unknowns, such as property values in an uncertain economy.”

Janda stated the Board’s debt strategy takes into account all of these factors, and LISD is well-positioned financially after a conscience effort of the Board to reduce the capital appreciation bond (CAB) debt from 78 percent down to 49 percent. The CAB percentage continues to decline, and the long-range debt plan has this threshold under 25 percent by 2025.

Rating agencies focus on numerous debt factors such as the diversity of a tax base, interest to principal ratios, and the structure of the debt service schedule. Less than 4 percent of the LISD tax base comes from the top 10 taxpayers, interest is less than the two-to-one threshold often used as a national gauge, and the repayment schedule is flat, rather than escalating. In fact, the last five years of the debt schedule is 100 percent current interest bond (CIB) debt and only represents 7.5 percent of total debt outstanding.

For more information, please visit LISD’s Financial Transparency page