The Education Debt Industrial Complex


EMPOWERTEXANS
May 22, 2014

Spring means it’s bond season in Texas. May brings warmer weather and the opportunity to further indenture our posterity with wasteful school debt. For advocates of responsible financial stewardship by school districts, it is frustrating to see measures increasing debt and taxation consistently passing with high margins, low voter turnout and little public scrutiny. This year, voters approved a vast majority (87%) of the proposed $6.2 billion of debt on ballots across the state.

A closer look at the political process surrounding bond elections and tax ratification elections (TREs) should make it apparent why such increases sail through elections. A coalition of bond beneficiaries cooperatively work to increase everyone’s debt burden. Coupled with the low level of interest and turnout, and polling place manipulation by ISD election administrators–”Rolling Polling”, passage is all but guaranteed. School board officials encourage these “investments” because they have a strong incentive to do so. If you could vote yourself a pay raise or get larger, newer facilities with someone else’s money and little to no repercussions, would you?

Most dishearteningly, these new expenditures may not even benefit students in the aggregate. Typically, these new-debt dollars are spent on new facilities that rival large state universities and Fortune 500 companies in their opulence. Regardless of the results of this spending, a more fundamental question has yet to be answered: how do these facilities actually improve student outcomes? If the students might not have any major benefits from these massive expenditures, then who does?

Construction companies, PTAs, elected officials, and public relations consultants work in concert to “game” the vote and turnout those they know are most likely to support the bonds. In economic terms, the new spending from the bonds or TREs is a concentrated benefit and represents a diffuse cost to taxpayers in the form of future tax increases. For TREs, the increase is sold to the public with language that downplays the incrementally increasing action of the property tax in areas of increasing property value. This practice could only be adequately described as an “Education Debt Industrial Complex” whereby special interests and elected officials work together to divert public monies to a particular cause or industry. In this case, it increases Texas’ record-holding local debt.

For one of many real instances of this collusion, look at the most recent round of bond elections at many ISDs in Texas.

In Frisco ISD and Cypress-Fairbanks ISD, we submitted an open records requests to see the donors of the Frisco Schools First PAC and the Say Yes For CFISD Kids PAC, the pro-bond political action committees (PACs) participating in the most recent bond election.

According to campaign finance disclosure reports from 2014, companies in the construction, surveying, architecture, and contracting trades largely fund Frisco Schools First PAC. Out of the $71,545.30 in contributions reported in 2014, $50,085.00 or 70% came from firms that design, build, equip, manage, service, or maintain school facilities. Other interesting sources of donations include FC Dallas, the area’s Major League Soccer (MLS) franchise as well as several law firms involved in property tax appraisals.

Also of note is a $2,500 donation to Frisco Schools First from Pogue Construction of McKinney. The firm is now infamous for its faulty construction of the Allen ISD football stadium. The massive $60 million project was financed by a bond package approved by voters in 2009 and valued at over $100 million. Despite being less than two years old, thestadium has been deemed unfit to hold spectators for the upcoming football season due to potentially dangerous structural problems.

The Frisco Schools First PAC 2014 reports can be found here: April Report May Report

We found a similar pattern of donations toward the pro-bond PAC involved in the record-setting $1.2 billion bond election in Cypress-Fairbanks (Cy-Fair) ISD this May. Firms catering to new school construction, equipment, or service gave over half of the $109,410.01 in contributions to Say Yes For CFISD Kids PAC, as reported in 2014.

Law firms that participate in the school district project bidding process also donate heavily to the pro-bond PACs in both Frisco ISD and Cy-Fair ISD.

The Say Yes For CFISD Kids PAC 2014 reports can be found here: April Report May Report

Where does the money go? PAC expenditures are directed mostly to public relations efforts. Strangely, even some political consulting firms get into the action. Frisco Schools first PAC hired Allyn Media. This firm is most notable for its work with State Senator John Carona and State Representatives Dan Branch, Diane Patrick, Linda Harper-Brown, as well as Former State Representative Todd Smith. Also worth mentioning is the fact that none of these Allyn Media clients will be serving in the 84th Legislature.

There is a very clear alliance of bond “winners,” with the tax base of a school district being the collective losers. New spending and debt is passed-on to the public in the form of higher taxes now and in the future. Who wins the construction contracts? Predictably, it is likely the firms most heavily involved in the passage of the school bonds. While many in the media are quick to point to grassroots groups and activists as “outside influences” on campaigns; activists never directly financially benefit from their work in elections. The same cannot be said for the outside influences in these bond proposals submitted to voters.

Texas Taxpayers deserve fundamental school bonding reform. The system is “gamed” by special interests at the expense of the public interest with breathtaking flagrancy and alarming regularity. It is time that citizens in school districts considering future bond initiatives implore their elected leadership to avoid massive new spending on large projects where current resources can and should be utilized; beginning with the reduction of bloated, top-heavy ISD bureaucracies. It is time to stop fueling the education debt industrial complex.

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