Texas is Hitting School Construction Finance Limit, Raising Costs: Bipartisan Bill Would Remedy Now

Washington, D.C. – After Texans across the state voted for increased school construction funding this November, an outdated federal limit being reached right now is driving up financing costs, diverting taxpayer dollars away from building new classrooms and renovating outdated facilities and towards servicing higher interest rates. To meet this issue with action, U.S. Representative Lloyd Doggett (D-Austin) has now introduced the Keeping Texas School Construction Costs Down Act (H.R. 32), joined by co-lead Rep. Jodey Arrington (R-Lubbock).

“Texas has grown so much that this outdated limit is already in the rearview mirror,” said Congressman Doggett. “Without a corrective course, we’re currently barreling toward sinking hundreds of millions of education dollars into needlessly high financing costs. After overwhelming recent voter approval of much-needed school bonds in Austin, I am particularly concerned about the impact on Austin ISD. Let’s get back on track with my bipartisan Keeping Texas School Construction Costs Down Act so that our students get the most benefit possible from these taxpayer dollars.”

“Building new schools and upgrading existing facilities are important components in accommodating the State of Texas’ rapid population growth,” said Congressman Arrington. “The Public School Fund and its Bond Guarantee Program have been instrumental in helping school districts achieve lower financing costs for critical school infrastructure and meeting the needs of our K-12 students. Today’s students are tomorrow’s leaders, so it’s important that we come together in a bipartisan effort to invest in our students and protect Texas schools from high financing costs. With schools now being denied access to the Bond Guarantee Program, this issue is more urgent than ever.”

The Keeping Texas School Construction Costs Down Act (H.R. 32) would make a permanent fix to the outdated 2010 exemption that previously made it possible for the Texas Permanent School Fund (“PSF”) to guarantee new bonds under the Texas Bond Guarantee Program (the “BGP”) for the construction of school facilities in the State.

Now that this limit has recently been hit, the PSF has been forced to deny approval for $6.8 billion in new bonds for which school districts had applied for the guarantee.

By guaranteeing the bonds school districts use to finance school construction, the BGP lowers the cost of school construction for Texas school districts, thereby saving taxpayers an estimated $425 million per year. The BGP has been in place for nearly 40 years, helping school districts and taxpayers save money on borrowing costs for critical school infrastructure. While the current federal exemption is fixed to the PSF’s value at a moment in time well over a decade ago, Texas’s school population and the need for new and updated facilities have steadily grown since then.

Rep. Doggett has been advocating for a fix and warning of the looming cutoff since 2021, leading an effort last year with Rep. Arrington along with much of the Texas delegation to ask the administration to take action prior to the limit being hit.

###

Follow Congressman Doggett

Facebook: https://www.Facebook.com/RepLloydDoggett | Twitter: @RepLloydDoggett | Instagram:@RepLloydDoggett