Muri: District needs still there

Although Ector County ISD’s $398 million bond failed May 7, Superintendent Scott Muri said the needs haven’t gone away.

There no other way to pay for those needs except with a bond, so the district will be asking the community to decide again.

Muri added that this a time of reflection and talking to board members to get their thoughts on the bond because, ultimately, trustees will be the ones that make the decision on what to do next.

In two propositions, the bond included technology needs, a career and technical education center, lifecycle and maintenance and lifecycle needs, a new high school and more.

“My job is just to recommend and listen to people in our community. That’s what we’re doing now, as well. I’ve already engaged in some interesting conversations with folks just to get their perspective. But we’ll take all of that and reflect on it as a team of eight and then decide what to do next,” Muri said during a May 13 interview.

“One thing that hasn’t changed are the needs. Every single day those needs that our kids have will become greater. That’s the urgency of this is the fact that those needs continue to grow. We’ll start the year with teachers in some schools using technology in their classrooms that is 10 years old. This year, it will be in year 11, or 12 … because we will not be able to replace that for our kids and teachers,” Muri said.

He added that ECISD will continue to have students who cannot get into career and technical programs they want to participate in, such as welding.

“It’s not just welding; it’s the hundreds of kids that cannot take their CTE courses because we simply don’t have space to offer (them). It wasn’t just about space, which is the most significant, it’s also about the equipment they use, which is rather expensive. You have kids in welding that use professional-grade equipment,” Muri added.

“We were going to work with OC (Odessa College) to design a pathway specifically for them and now we don’t have the capacity to do that. We don’t have the space to create that program that was going to be at our new facility. There will be other businesses coming to our area that will have other needs. It’s our responsibility as an educational institution to prepare kids for the world of work. … ,” Muri said.

Among the maintenance and repair needs are fire alarm systems. At some schools, ECISD can no longer buy replacement parts because the systems are so old and the entire system has to be replaced.

“We have an employee that solders and creates parts because they’re so old … To me, that’s unacceptable for our schools. … We have plumbing issues and mechanical issues that … have gone beyond just regular routine maintenance. They’re now replacement cycle because they’re so old. Bonds are used for lifecycle replacement because the dollars are so expensive … We have to figure out a path forward because all of those (needs) still exist and will get worse,” Muri said. The federal government provides funding for career and technical education. Many CTE programs are computer based, but it doesn’t cover everything.

He added that it requires “a healthy investment of dollars” to make sure students always have access to the latest and greatest equipment so they are truly prepared for the workforce.

Students take CTE classes in the Frost Building, the Ag Farm, George H.W. Bush New Tech Odessa and Odessa and Permian high schools.

“We have over 700 kids that go into New Tech every day to take CTE courses. That was another thing that that I’m not sure people are aware of … New Tech has 440 Kids in the building, but the CTE kids that are not a part of New Tech are also in the building and there are over 700 of them every day,” Muri said.

He added that there are CTE courses at the high schools, such as business courses, so those students don’t leave their campuses.

The state created the school funding model so that there are two buckets of money. One is maintenance and operations, which is how ECISD operates on a daily basis.

“We pay our people; we pay our utility bills; we provide technology for kids; we provide the tools and the resources with maintenance operations. The other side of the pot is the bond funds. Those are capital expenditures. That’s new school construction, school renovation, lifecycle maintenance and repair, land procurement, etc. …,” Muri said.

Bonds take care of the high-dollar items.

There are so-called golden pennies available, but those are for “wealthy” districts that give some of their money back to the state for “poorer” districts.

ECISD is not considered a recapture district, Muri said.

Rep. Brooks Landgraf said the golden pennies still need voter approval.

“Golden pennies are associated with raising taxes and not having to pay recapture,” Muri said. “We’re not in that recapture environment. Any taxes that we would increase, all of those dollars state in our system on the bond side. On the M&O side, House Bill 3 … there’s equalization, so when our property values increase and we take in more money, the state makes adjustments in how education is funded,” Muri said.

The more property values rise, the less the state gives the district. “But the state balances that and so … House Bill 3 actually provided more money from the state and less money from local taxpayers, even though it’s all our tax money. … It is moving the same money around to different pots, in a sense. This year, going into ’22-‘23, we will receive more money from the state. That’s a part of the House Bill 3 formula and so our taxpayers will see that,” he added.

ECISD’s maintenance and operation tax rate for 2021-22 is $1.0517 per $100 valuation. Muri added that the school finance system has changed. “House Bill 3 was a whole shift in the way schools are funded and if people got to know the last system, this new one is completely different. That’s why I think it’s easiest to talk about the two pots of money because that hasn’t changed — two separate pots of money that come from two different sources and they’re used for two different things that remains the same. How that the dollars get in there is what the state has shifted,” he said. The fund balance is on the maintenance and operations side. “The guidance from the Texas Education Agency is that we need to have, we’ll call it the emergency fund. Much like in our families, you want to have some money for when the refrigerator goes out, or the air conditioner goes out and you have that big expenditure. We as a school district have three months’ (in reserve),” which is what the state recommends.

The district has a perfect rating of 100 from the Texas Education Agency because it maintains that fund balance.

“We spend our money in the categories that the Texas Education Agency defines. We don’t spend too much money on administrators. We don’t spend too much money on maintenance. … and the list goes on. They define some parameters and we fall within all of those parameters. So what we’re discouraged from doing is to have a really large fund balance, like (we) don’t have a year’s worth of savings. It’s really for two reasons. One is the expectation of the state … that you spend this year’s money on this year’s children. And … if school districts saved large amounts of money, then the decision to build a new building, or to purchase a really large piece of expensive piece property would be solely in the hands of the school board rather than in the hands of the voters. So, by putting capital expenditures on the bond side, you ask your voters to build that new school, or buy that expensive piece of property, etc, etc.,” Muri said.

During the May 17 board meeting, Chief Financial Officer Deborah Ottmers presented a budget update. The 2022-23 proposed budget, at this point, is $334,202,505. The 2021-22 budget is $309,779,674.

“The vast majority of our budget is people,” Muri said.

If you used the $15 million that was in the bond for technology, that means you would have to cut people from the district.

“… We’re giving our employees a raise this year. We would eliminate the raise in order to purchase the technology,” Muri said.

And that would cover about half the technology needs, he said.

“… If we don’t compensate our people well and take care of our people, while we may have $15 million worth of technology, I won’t have people to use that with students. Other people will pay more for teachers, or they’ll take care of their employees more effectively and we’ll lose people,” Muri said.

If you build a new building, you would have a nice building but no staff for it, he added.

“That is why you have bonds because it is not logical to build things with general funds. … That is not what the state wants us to do. It’s not how they want us to spend our money. From a maintenance perspective, maintenance in the regular budget is routine maintenance. I’ve used the example of your home air conditioning system. Every year, you have somebody come and provide routine maintenance on your air conditioner system to make sure that it’s functional. But at one point, the air conditioner guy is going to come and say I can no longer repair it. It is time to replace it. Fortunately, that may be at 20 or 25 years because it has a lifecycle and that’s where the bond comes in. We have a plumbing, electrical, HVAC, those systems in our schools because our schools are aging (and) are in need of lifecycle repairs, not tweaking and fixing. We do that ourselves with our budget, but we’re talking about ripping out plumbing for a whole school and replacing it, or ripping out electrical and replacing it, or a fire alarm system, taking the whole thing out and replacing it. That’s what a bond does. We fix it along the way and take care of it, make sure it remains functional. That’s the maintenance side of our budget, and we do that well,” Muri said.

When PBK Architects came in and walked all the ECISD buildings, Muri said, they were highly complimentary of the maintenance team because the buildings are in such good condition considering their age.

With the roofs that needed repair, and are still undergoing repair, after the hail storms of several years ago, Muri was not here yet. But there was not enough tax revenue coming into the district back then, he said.

“… If you look back at our financial picture in 2015-16 and ’17, it was grim. The fund balance was incredibly low; not three months; not two months. It was more (like) days … The district was in dire financial shape,” Muri said.

During 2019, 2020 and 2021, the district was still having insurance companies provide estimates, but they underestimated.

“… Then we would put the roof out for bid and the bids would come back and it didn’t touch a million dollars. It was much more than that. So the insurance companies underestimated how expensive it is to do construction work, in this case, roof repair. In this area, they’re just a limited number of workers; a limited number of companies. Then we had a huge need; 27 schools. That’s not one roof, that’s 27,” Muri said.

He added that the companies have also had worker shortages.

“… Towards the end of the process, the insurance company began to learn that, oh my goodness, you all are unique, and it’s going to be very expensive to repair roofs in your community,” he added. Rep. Brooks Landgraf, R-Odessa, said particularly districts that are subject to recapture can acquire golden pennies.

“… The school district gets to keep 100 percent of the revenue generated through that, but it does require voter approval. It still kind of puts the school district back at square one in terms of getting voter approval,” Landgraf said.

“Something that might not be clear to everybody is that state law state law is not designed to allow school districts, including ECISD, to put money into a piggy bank, or to spend it on big capital projects like building new schools without voter approval via a bond election,” he added.

School district budgets are very tight all across the state, he said. They are designed so that one category pays for salaries and that is what takes up most of ECISD’s budget.

The remainder is dedicated to things like overhead costs, supplies, insurance premiums and other non-salary expenses, Landgraf said.

“… Those kind of categories are regulated, but obviously once those basic costs are covered then it’s very difficult to have anything left over to pay for multi-million dollar construction projects. That is a function of state law for better or worse,” Landgraf said.

He has advocated for the full repeal of Robin Hood.

“We’ve not been able to achieve that. It just doesn’t have the statewide support in the legislature, but I am very proud that I’ve been able to lead incremental change on that, particularly through various amendments over the last few years then with the big change we made in HB 3 in 2019. … ECISD has not made a recapture payment since 2015, but without some of these changes ECISD would have been making some recapture payments …,” Landgraf said.

“… I still think there is more work to be done because there are other school districts, particularly here in the Permian Basin that although their recapture liability has been reduced it hasn’t been eliminated to the same degree that ECISD’s has. I think there’s still more work to be done, but yes, we’ve been able to keep more of our taxpayer money in the district as a result of those changes. I think it has helped. I think that’s one reason why ECISD has been able to provide some of the teacher salary raises that we’ve seen …,” Landgraf added.

He said he has been asking himself if funding the public school system through property tax revenue is inherently flawed.

“I do think the answer is yes. There are so many flaws in a property tax system. It’s not good for taxpayers. It obviously creates challenges for school districts, so … with HB 3 in 2019, we did start to shift the financing of our schools at least a little bit more to sales tax revenue and that led to a decrease in reliance on property tax payments and a decrease in the reliance on ISDs to fund the costs of operating their schools,” he said.

“… I think has been successful and I think we should continue to capitalize on that success. It really comes down to whether people of Texas want to make that shift. … I think people are just more comfortable with the concept of a consumption tax, like a sales tax, as opposed to a property tax where some seniors in some cases are being taxed out of homes that they’ve lived in for decades, particularly seniors who are on fixed incomes. And also people just don’t like the idea of feeling like they’re paying rent to the government just to live in their house, or live on their property. I absolutely get that as a property taxpayer, too, so I think that’s something that we definitely need to look at. I’m hearing more and more about that from constituents with each passing year,” Landgraf said.

He added that there is always going to be a cap on the revenue that can be raised without a bond issue.

Landgraf said he recognizes all the needs that were included in the bond issue, but , “I think it was an imperfect proposal.”

“I think with a little more work and bringing in even more stakeholders into the conversation I think it can produce a different outcome,” he said.

“Hopefully, there are some lessons for everyone to learn in this process … and keep those in mind for the future.

It’s communication and I’m trying to stay in my lane. I see my job as doing everything I can to provide state resources … State funding has increased to ECISD since I took office. … I’m proud of doing what I can at the state level to make sure that we have the resources to educate our students here in West Texas, but I also do believe when we do increase that money. That funding … should be focused on students in classrooms and administrative costs should be efficient and minimal in order to maximize the learning opportunities for the students,” Landgraf said.

He added that education funding needs to be student and teacher focused.

“I’m proud product of ECISD and I’m a big supporter of public schools in Texas and I’m going to continue doing what I can at the state level to provide those resources and will continue to advocate that those precious resources be directed to the classroom because this has to be about students and also getting the best teachers in those classrooms for the benefit of students,” Landgraf said.

“If we don’t pay for it, someone else will. It also helps you maintain a healthy student to teacher ratio …,” he added.