Q. Will the new buses have air conditioning? 

A. Sadly, we do not know at this time. When the finance people asked about urgent needs, two came up- playground and buses. They added in $250k to meet those needs. Whatever is left after getting a playground will go toward bus purchases. What we end up getting will depend on what is on the market at the time. There is no way to guess in advance. We will price shop new and gently used buses to get the most bang for our buck.


Q. Didn't FEMA pay for the new school?

A. FEMA reimburses a percentage over a period of years. The estimated overall cost of the recovery is around $31,000,000. At this point, FEMA can't/won't tell the ISD what the final amounts will be and will not give any indication of when we will know. Based on information from TDEM, closeouts were taking thirteen years but they were trying to get it down to nine. That was before Harvey and COVID-19 slowed everything down. FEMA currently has the total recovery at $21,550,892.65. This would make their 75% share $16,163,169.49. In addition, we are receiving $5,000,000 in reimbursements on new construction from the GLO grant. Our current best estimates have us coming up short by six to eight million dollars for the total cost of the recovery. FEMA is currently trying to close out Ike claims from 2008. Schools are getting requests for reimbursements from so long ago that often times, there is no one remaining on staff who worked the grant. This fits in that thirteen year timeframe. If our experience is anything like what other victims are going through, we may not know the final amounts until 2029. 

 

Q. How do we know if the disaster recovery funds have been spent wisely?

A. Prior to commencement, the Office of Inspector General of the Department of Homeland Security conducted an audit of the ISD's internal controls and policies. Based on the recommendations from the audit, the ISD updated guidelines to create a compliant and transparent program. 

Disaster grants are paid on a reimbursement basis. The ISD must spend the money, while complying with an indescribable amount of regulations, then wait for reimbursement. Every detail of every solicitation and every contract is audited to insure compliance with dozens of state and federal regulations. Once the funds are spent, the state audits every dollar of every check for compliance with all aspects of federal and state law and policy as well as FEMA and GLO guidelines. This is done before reimbursement by a private accounting firm hired by the government and later by the OIG. Prior to receiving funds, the ISD has already spent the money and had the solicitation, contract and spending audited. This takes a long time and is the primary reason behind the need for the loans.

In addition to the money being audited through the government disaster grant processes, the ISD's checks are listed on a report each month and reviewed in public session by the board. These funds are also audited by an independent auditor as part of the traditional school audit process and the audits are then reviewed by the TEA. We have excellent audits.

Click here to review the latest FEMA ("Recovery Account") Audit

 

Q. Why is a bond just now being proposed after the school is in the final stages of completion? Why was this not anticipated at the beginning of the project?

A. This is the FEMA disaster recovery project started as the water was receding in 2016. There was no way anyone could have predicted the delays and expenses resulting from multiple subsequent major disasters and COVID-19. When this project started, the ISD believed FEMA would reimburse 75%, and there would be an allocation at the end to cover the difference. Today the state's budget is drained from COVID-19 spending, Harvey victims are the priority for FEMA resources, and FEMA is so far behind, they are still trying to close out Ike

 

Q. What is the projected time frame of the repayment of the debt? (How long will the debt be a tax burden if passed?)

A. Thirteen (13) years. When I read this question to the FA, he explained that if there is a windfall from FEMA at some point in the future, it can be used to pay down debt but the potential dates are determined when selling the bonds. He said as a general rule of thumb, it is 10 years, but it is negotiable. You can add in language to buy it back earlier, but it usually affects the interest rate to do so.

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Q. Is there money in the recapture of the Robinhood act that could be utilized towards the incurred debt and expected expenditures on infrastructure due to natural disasters?

A. Deweyville ISD was the first school in Texas to ever waive CH41 requirements and withhold Robinhood. That is part of how we have been able to reduce the thirty million dollar shortfall we were facing in 2016. It was a big victory for Deweyville but only covers a portion of the funding shortfall.

Q. What is the breakdown of cost between buses and play ground equipment?

A. There are still several unknowns. Basically, whatever is needed after the Buna auction and donations, will come from the $250k. Whatever is left after providing a playground will go toward the bus fleet.

 

Q. What local corporations will fund the 80% of the proposed bond? 

1. Cottonwood Energy Co. LP (Electric Utility / Power Plant)
2. ETC Crude Oil Co. (Oil & Gas)
3. Entergy Texas, Inc. (Electric Utility / Power Plant)
4. HT VII Texas LP (Lumber Processing)
5. FS San Augustine LLC (Lumber Processing)
6. Crown Pine Timber 1 LP (Lumber Processing)
7. Western Waste of Texas, LLC (Trash / Landfill Utility)
8. Houston Pipeline, Co. (Oil & Gas Pipeline)
9. Golden Pass Pipeline, LLC (Oil & Gas Pipeline)
10. Precision Drilling Co LP (Oil & Gas Drilling Services / Equipment)

 

Q. What obligations, if any, does FEMA have to help satisfy the debt of the new elementary school?

A. FEMA will not pay the debt directly, however they are expected to pay 75% of eligible disaster costs after deductions. They reduce the eligible costs by deducting the amount the ISD received for insurance, the total they believe the ISD should have been insured for, the difference between repair and replacement costs for any structures in certain flood areas, and all kinds of other deductions we are not yet aware of. As of this morning, they have their share of the roughly $30 million dollar recovery set at $16,163,169.52 or roughly 54%.

 

Q. Did FEMA “purchase” the old elementary school? If so, does DISD receive the funds? If so, what is that money allocated to?

A. No. FEMA will require the ISD to demolish the old elementary. They should pay 75% but have their portion set so low that we are unable to cover the difference and therefore have not yet been able to begin the work. The first priority right now is to get the students out of the trailers and into a building with brick walls. Once that is done, we will look for ways to pay to have the old buildings removed and hopefully will be able to turn that area into something nice for the community.

 

Q. Has the Administration/Board explored other avenues for funding the repayment of the current debt obligation and proposed expenditures instead of a tax burden on the community?

A. Yes. We have sought out and pursued every available dollar we are aware of. The Robinhood win was a big help. That closed the gap by about $1.4 million. Then we heard that Harvey flood schools are getting reimbursed at 90%, are guaranteed a 30 day turnaround on reimbursements, and have an allocation to cover the gap at the end of the process. This is the justification we used when requesting an allocation from the state. This seemed promising until COVID-19 put the state's budget in the hole. Now it seems unlikely. The only other option was to take out a loan. This is where we are now. We have a loan on the M&O side that can be consolidated with our current bond debt, at a far lower rate, and the only new spending in the entire plan is $250k of playground and bus money. 

In addition to going after outside money, we have for five years budgeted well within our means in an effort to cover expenses for getting the HS back to standard and for building the new elementary. We creatively worked an ESPC program grant to replace failing HVAC equipment, including chillers, and to get the lighting replaced. We worked with the insurance company to identify a hail storm in the records and got the leaking roof replaced for a deductible. We worked with the county to get CDBG funds. We priced grant management firms and not wanting to give up 10% of a thirty million dollar project, we went to Austin, got trained, and worked the grants at night and on the weekends to keep those millions in the district. 

 

Q. What will be the result if the bond is voted down.

A. That depends on what portion of the debt the district decides to pay each year. As an example, if the district decides to pay it down at $500,000 per year, then the district will need to find ways to cut about $500k from the M&O budget.

 

Q. When FEMA reimburses the school district over the period of time (10-13 years is what I was told) will those funds be applied to the debt obligation and the tax burden reduced as they are received? 

A. The FA explained that yes, you can use M&O money to pay I&S debt but not the other way around. You can look at the ISD's track record and compare your rates to neighboring ISDs to see that Deweyville ISD has made low taxes a priority.

 

Q. Are these funds confirmed funds by any grants that have been established for Newton County already and this is just a timing issue? 

A. Newton County received about $32 million in GLO funds for the 2016 flood. Of this, Deweyville ISD has been granted an allocation of $5 million. This was also a big win for the ISD as these funds have traditionally been designated for housing, road, and bridge repair. I believe we are the first school to have ever been allowed to use CDBG block grant funds toward construction. Of the $5,000,000 we have received $4,250,000. We expect to receive the remainder after the school is complete and everything has been audited.

Q. Is it a possibility to approach SRA on this matter since they do have the new pumping station in the school district? 

A. The SRA works under the guidance of the Federal Energy Regulatory Commission.  We have written letters to everyone all the way up to the President and the result seems to be the same. The letter gets forwarded to FEMA and FEMA sends us new hoops to jump through.

 

Q. Can a total debt obligation pertaining to the bond for the High School and this new bond, be communicated to the community as well, many of our taxpayers were not home owners or property owners at that time period which would make this a debt in addition to current obligations? Transparency is important on a subject that even current taxpayer's children will be paying for, for years and years to come.

A. Yes. The Vice President of Government Capital Securities has agreed to come to Deweyville for the meeting and will explain this in as much detail as the participants desire. Here's my less technical overview. 

Upon realizing we were in a mess and FEMA was not going to give us timelines or estimates, I reluctantly started working numbers to see what it would cost to get the money to the I&S side where it belongs. The numbers were more favorable than I had anticipated and I thought I was wrong, so I sent my calculations to GovCap with an explanation that I want to do this without being a burden to the taxpayers. They know a whole lot more about this than I do so they reworked the numbers wrapping the new money with the old and refinancing it all at what they refer to as "historically low rates" and came up with roughly $.0263 as the total increase. But this increase takes place during a several year decrease so looking at the Deweyville ISD taxes as a trend since the flood, our taxes have dropped by a quarter of a dollar. We are looking at the burden from the bond meaning our taxes have dropped by $0.24 instead of by $0.26.

Then he gave me the bad news. There are timelines for bonds. Having never been in charge of a bond, I was unaware. It turns out you have to have all kinds of things approved by lawyers by certain dates and the dates were coming up fast. I did not want to have to pay the interest and fees on the big loan if there was any way around it, so I told him I want to go for it if it is at all possible. With the help of GovCap, we have met those deadlines and have a chance at saving a six figure sum, just on interest and fees, by doing this before the note comes due this summer.