Lancaster ISD hears BOK Financial briefing on debt, I&S options including bond prepayment at current tax rate

Lancaster ISD trustees on Aug. 13 received a presentation from BOK Financial on the district’s debt portfolio and options for using interest-and-sinking (I&S) revenues to prepay debt without increasing taxpayers’ bills.

The presentation, delivered by Allison Long of BOK Financial, said the district has actively managed its debt through refundings and prepayments and has “saved more than 57,000,000 of interest cost savings for taxpayers, by actively managing its debt portfolio.” Long showed examples that, under a 43.75¢ I&S tax rate, the district would generate about $14,000,000 in excess I&S collections that could be used to prepay approximately $13,300,000 of callable bonds and save an estimated $4,800,000 in interest costs.

The presentation explained how prepaying callable bond series would maintain the district’s bond capacity (BOK’s slides estimated capacity around $238,000,000 at a 43.75¢ I&S rate) while reducing long-term interest costs. BOK stressed that these were examples for trustees’ consideration and that prepayments target callable series to achieve savings.

Why it matters: The briefing tied the district’s options to recent state law changes. Long summarized two legislative items trustees should expect to affect future I&S decisions: Senate Bill 4 (an increase in the homestead exemption from $100,000 to $140,000 with related hold‑harmless funding) and Senate Bill 1453, which changes the mechanics for adopting an I&S rate above the minimum required for bond payments. Under the SB1453 rules Long described, a district that wants to adopt an I&S rate higher than the amount necessary to meet minimum debt service must publish the minimum debt service, the proposed I&S rate, the difference between the two and the intended use of the additional funds; after that publication, at least 60% of the board must approve the adopted rate.

BOK also showed multi‑year context: over the last five years Lancaster’s total tax rate has declined (primarily due to M&O compression) and property‑tax bills on an average home have fallen. This year, BOK noted slower property‑value growth (about 1.6% in the district) and the planned increase in the homestead exemption as reasons M&O compression is limited and why I&S planning remains a special focus.

Trustee questions focused on mechanics and timing. Long offered longer schedules and spreadsheets in the packet for trustees who want line‑by‑line details.

Ending: District staff and trustees will continue to consider whether to use excess I&S revenues for prepayments and how to comply with the new disclosure and approval mechanics described by BOK, with any concrete action to return to the board for approval at a later meeting.