Harlingen school board passes $18 million bond issue

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HARLINGEN — The school board’s passed an $18 million bond issue, landing a low interest rate to finance maintenance operations across the district.

Saving nearly $300,000, officials tapped the lowest bid offering a 3.62% interest rate after opening eight proposals, with the highest bid coming in with a 4.10% interest rate.

“I was pleased that there was quite a bit of demand for our debt issuance and we were able to secure really good terms,” board member Ricky Leal said Wednesday, referring to the low bid offered by Robert W. Baird and Co. in Madison, Wisconsin. “The need balanced with favorability of terms made it a good time to take this on.”

The low interest rate is projected to save the district nearly $300,000 in total interest payments projected to climb to $7.8 million, Noe Hinojosa, the district’s financial advisor with Estrada Hinojosa, told board members during Tuesday’s meeting.

“The fact that we received eight bids pretty well shows that the investment community has a lot of faith in you doing the right thing, and your staff more importantly,” he said. “I’m glad one of them got really bullish and gave us a very low rate.”

The bids’ opening marked the second round of proposals from investment firms.

After receiving a single bid in December, officials went out again for proposals.

“We started back in November, December,” board President Greg Powers told Hinojosa. “We’ve come a long ways in 60 days and it’s through your hard work and efforts on our behalf.”

Hinojosa called it “a team effort.”

“You have a very competent staff and they keep us on our toes,” he told Powers.

Now, officials are planning the bond issue to fund “maintenance and renovation projects,” the meeting’s agenda states.

“Generally, these funds will go towards facilities maintenance needs throughout the district,” Leal said.

For months, officials have been working to pull the district out of one of its deepest financial crises in decades.

In late August, school board members found out former Superintendent J.A. Gonzalez’s administration had pulled $23.2 million in cash reserves to cover operational costs including unbudgeted expenses, dropping the fund balance as low as $17.2 million.

From 2022 to 2024, the district’s fund balance dropped from $48.3 million to $17.2 million, its level when the school board passed the current $215.3 million budget last June, Hinojosa told board members last month.

At the time, he projected a period as long as three to five years to build back the budget’s cash reserves.

Now, the district’s fund balance is climbing over $21.2 million.

Late last year, interim Superintendent Veronica Kortan, the school board’s finalist for the superintendent’s job, spearheaded a drive cutting at least $7.2 million in expenses.

While reviewing the district’s staffing, officials are planning to “right-size” departments and campuses.

Last month, as part a new Early Exit program, 44 professionals, including 28 teachers, notified officials they were retiring or resigning this year in exchange for $1,000 incentives.

Meanwhile, school board members are working to give employees pay increases.

As they work on next year’s budget, officials are planning to cut millions in expenditures, aiming to rebuild the district’s fund balance.

In late August, school board members found out Gonzalez’s administration had pulled $23.2 million in cash reserves to cover operational costs including unbudgeted expenses.

While officials argue Gonzalez’s administration pulled the money without the school board’s knowledge, Gonzalez claims he didn’t know Ramon Mendoza, the district’s former assistant superintendent of business services, was withdrawing cash reserves.

In early September, Gonzalez, who had taken office a year before after serving as McAllen’s superintendent since 2016, suddenly resigned with two years left on his contract, five months after board members gave him a one-year contract extension along with a $10,000 pay increase, bumping his salary to $310,000.

In November, the certified public accounting firm of Carr, Riggs and Ingram gave the district a clean audit for the 2023-24 school year.

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