Raining jackpot funds in Texas school district

Superintendent John Rouse of Rains ISD explains the luck and benefits of a 200-year-old state law
By: | Issue: November, 2015
October 14, 2015

Superintendent John Rouse sits on a jackpot of sorts.

Chief of Rains ISD in a community not far from Dallas, Rouse says a little luck helped his district acquire about $8 million from what is known as the state’s County Permanent School Fund.

It started two centuries ago. In the 1800s, the state granted land to every school district, which back then served entire counties.

Over the years, more districts sprouted in various counties and many of the parcels were sold. In the early 1900s, Rains County did in fact sell its property. But as luck would have it, the buyer defaulted on his note and the lands reverted to the district.

It gets better. In the 1950s, gas and oil were found on the property, hundreds of miles away. The property was actually in nearby Hoxley and Cochrane counties in western Texas. And the revenue on that land from that gas and oil surplus goes into the county school fund. The district receives the interest funds over the course of every year.

Rouse, a former football coach, says he has used the fund sparingly. But he did spend $3 million of it when the county needed a new stadiumÑfootball, after all, is a sport Texans hold dear to their hearts. Accessing the principal requires approval from the school board and the county commissioners’ court.

Only about a handful of districts in Texas still have the permanent fund.

Managing editor Angela Pascopella spoke with Rouse after a District Administration Leadership Institute session last summer.

First off, what do you make of this special pot of gold?

We’re very fortunate to have it there, first and foremost. But you can look back at history and see that the county sold it. Was it luck the guy defaulted on the note? His ancestors might not be happy about it. And the fact is, it came back, and eventually they found gas and oil on it. There might be a little luck involved in that.

But the people who have gone before us have been very good stewards of that money and in making sure it was not used except when needed. And that’s an extra $8 million to $10 million.

Rains ISD (Texas)

Superintendent John Rouse
Schools: 4, including an elementary, intermediate, junior high and high school
Students: 1,630
Student demographics: 92% white, 3% black, 3% Hispanic, 2% other
Staff and faculty: 280
Per child expenditure: Roughly $5,200
Students on free or reduced-price lunch: 60
Yearly budget: $15 million

It’s a huge benefit for our district, the county and the taxpayers.

How much is in the fund now?

It has changed due to interest rates. When I got here three years ago, it was just shy of $10 million. The fund has built itself back to $8 million now.

But we can access only the principal [or $8 million now] by approval of the commissioner of the county court. We have available to us, every year, the interest that the property generates from the oil and gas it sells.

Why a football stadium?

The schools are in good shape. There is a brand new elementary school and the high school was built 12 years ago. The intermediate school was also recently renovated.

The football stadium of the past was in bad shape and it was becoming a safety issue. In Texas you bring a lot of people in for Friday night football games. The press box was small, it was very old.

And the stadium wasn’t ADA compliantÑit didn’t have to be because it was built so long ago. But it was not accommodating, so we obviously wanted to do that.

The stadium seats about 3,500 spectators. It has a concession stand, restrooms, a ticketing area and a new track around the football field, which has artificial turf.

It’s not fancy but it’s very functional and very efficient. We’re completely ADA compliant.

Friday night football brings in 2,000 people. There are very few other things that we do that bring in that many people to one event.

We’re a pretty small district and we compete against much bigger schools. Our kids work hard and the coaches work hard and we try to teach kids important values along the wayÑhow to be better men. Hopefully, some lessons in athletics will accomplish that.

Could you have built the stadium otherwise?

We would not have been able to do that without those funds. It’s very difficult to pass a bond for just an athletic facility because we are about educating kids. Athletics is a part of the educational process, but it’s not the most important part. Knowing we could do this without raising taxes was a huge benefit.

You also bought 85 acres two years ago. What’s that for?

The 85 acres was purchased with county permanent school funds. We currently have no plans for the land but I believe it will be used to expand the campus in the distant future.

Any future plans to use more of that fund money?

At this moment, we don’t have any immediate or long-range plans. We’re content in building up that fund again. It still generates about $150,000 in revenue from gas and oil sales every quarter. But as you know, gas and oil prices are down now so it’s not generating as much money as it once did.

And the rates constantly go up and down, and that affects how much money is available.

Every year, we can use the interest funds for whatever we chose. We do use that for supplemental budget items or on the maintenance and operations side, or we put it in a fund balance.

Will these funds ever run out?

There is no limit. As long as there’s a principal balance it will always generate interest based on current rates. Should the principal ever be taken to zero, and the oil and gas revenue ever cease, it would no longer generate funds other than as land.

There are a lot of things you can do with $8 million. Whoever follows me or future administrators of this district, we all walk a fine line between using it for the needs of today versus saving it for the needs of tomorrow.

The students who will follow in the years to come should be able to benefit from that as well.