Victor Pidogo: Bond sale kept homeowner costs lower; trustees weigh refinancing M&O notes to free operating cash

Victor Pidogo, a financial adviser brought in by district staff, told the Flower Bluff ISD Board of Trustees that the districtenefited from strong demand for its bond sale and a lower-than-budgeted interest rate.

"We ended up getting 4.76%," Pidogo said, noting the district budgeted 5% when it sought voter approval for the $193 million authorization. Pidogo said orders for the sale totaled about $374 million, helped by the state
nd district credit ratings. He illustrated the homeowner effect using a $400,000 appraised-value example and said the statehange to the homestead exemption significantly reduced what individual taxpayers actually paid.

Why it matters: the district increased its I&S rate by about 18.1¢ to support the bond program, but the new larger homestead exemption reduced the net bill for many homeowners. Pidogo said about half of the district
pproximately 8,100 homestead taxpayers saw little or no net increase because of exemptions and valuation changes.

The board then turned to a separate but related financing decision: $7.43 million in outstanding maintenance-and-operations (M&O) tax notes that carry roughly $740,000 in annual principal-and-interest payments through fiscal 2036. Pidogo outlined a legal option the board may pursue: ask voters in a bond election to transfer some or all of that M&O debt to the I&S side (a refinancing) so that the cash now needed for debt service would be available for operations.

Pidogo cautioned trustees the refinancing trade-off is straightforward: short-term operating relief at the cost of higher total interest. "You're not going to get the low 1% interest rate," he said of potential refinancing; he estimated a more likely 3%–4% market rate compared with the historic low rates the district obtained earlier in the decade. "What you're gaining, most importantly, is just cash flow to operate your school district and not have to dig into fund balances as much."

Board members pressed for clarity on alternatives. Several trustees asked whether it would be better to use existing fund balance to pay the notes early; Pidogo and staff answered that while paying principal from fund balance reduces interest cost, it removes liquidity the district could use for teacher pay and day-to-day operations. Trustees discussed mixed options: partial paydown now, partial transfer later, or a full voter-approved transfer.

Next steps: staff will provide July-certified valuations and the board will decide whether to place a transfer/refinancing question on a future uniform-election date. Any ballot language must include state-mandated disclosures that the change is a "tax increase" even if the district intends no net tax-rate hike.