A line in a staff report recommending Fort Worth ISD’s next financial advisory company caught the attention of trustees CJ Evans and Anne Darr.
It didn’t list how much the district would pay Estrada Hinojosa & Co. All it said was “to-be negotiated.” The three-page report did not detail any of the proposals from three other firms nor how administrators decided to pick the recommended company.
“I don’t have enough data to work with,” Darr said. “This is a really important decision.”
The school board on Oct. 26 considered allowing administrators to negotiate a financial advisory contract with Estrada Hinojosa & Co. However, several trustees raised red flags over the lack of details on costs, why this firm was selected and explanation about why the district is going from two financial advisers to one.
The Fort Worth Report submitted an open records request asking for the bids of all four companies seeking to be the district’s finance adviser and any documents used to review the companies.
Trustees voted 7-1 to table the item, which was on the consent agenda until trustee Michael Ryan requested it be pulled and tabled. Trustee Jacinto Ramos was the sole dissenting vote; board Vice President Daphne Brookins was absent. The school board is expected to reconsider allowing administrators to negotiate a financial adviser contract at its Nov. 9 meeting.
Fort Worth ISD trustees had a heated discussion over allowing administrators to negotiate a contract that would have Estrada Hinojosa & Co. advise the district on when to sell bonds.
The board’s hesitation upset Ramos, who argued trustees should be focused only on student outcomes and improving them.
“This is ridiculous. This is not our role. We are not financial experts,” Ramos said.
Estrada Hinojosa & Co. was one of four companies that answered a request for qualifications. The other firms were PFM Financial Advisors, RBC Capital Markets and Tijerina Galvan Lawerence.
Since 2017, Fort Worth ISD has used two companies as its financial advisers. That arrangement was made so the district could diversify the businesses it uses for services and not just use a white-owned firm, Ramos said.
‘Give us the rationale’
President Tobi Jackson said the trustees must be involved in these types of decisions because they are charged with ensuring Fort Worth ISD is being fiscally responsible.
She wanted administrators to explain why they wanted to only use one company to manage the finances for what may be Fort Worth ISD’s biggest expenditure ever if voters approve it Nov. 2. She said it did not make sense to use two firms for the $750 million bond from 2017 and use only one for a proposal that is twice as large.
“If you come back and tell us we only need one and give us the rationale for that, I am perfectly fine with that,” Jackson said. “I tried to get that information before this meeting, and I did not get the answers that I needed.”
Trustee Anael Luebanos, an accountant, said he would prefer two companies advising and managing bond finances.
Mike Ball, the district’s chief financial officer, said administrators can continue to use two financial advisers. However, the district needs to determine which company would lead and the other would review.
Regardless of the election’s outcome, Ball stressed the district needs a financial adviser to help plan for long-term capital expenditures.
Ramos characterized the tabling of its financial advisory firm as a political tactic. He accused board members of fraternizing with employees of the firms up for the contract. He also described the board’s tabling of the item as micromanaging administrators.
“When a bond is coming, when money is going to be coming to the district, all of a sudden there are questions about these kinds of topics,” Ramos said.
Jackson told the Report she rejected Ramos’ accusations of playing politics and said she had “no dog in the fight.”
She said she was concerned about how administrators changed the recommendation process. Ball, the CFO, did not provide a reason during the Oct. 26 meeting.
Ball said administrators did not provide an estimate because a contract has not been negotiated yet. The CFO described this as standard practice.
“You don’t want to have brain surgery by the low-bidding surgeon. You don’t want to do that with financial matters either,” Ball said.
However, he said, currently the district’s current contract is based on a per-bond sale basis and advisers do not get paid until bonds are sold. The per-bond rate decreases as the total sale of bonds increases, Ball said.
Superintendent Kent Scribner said that if administrators cannot get a fee they think is reasonable, they will come back to the board to restart the process.
An informed vote
After a heated back and forth between Jackson and Ramos, the first vice president of the board, Quinton Phillips, tried to calm the conversation. He said he understood Ramos’ passion for not wanting the board to get stuck in the weeds, but also he agreed with other trustees in wanting more information to decide what would be best for taxpayer dollars.
Phillips asked Ball to give trustees a presentation addressing all of the points brought up at the October meeting. Board members need to be informed on what they’re considering, Phillips said.
Ball told the trustees he understands their anxiety of not having a firm cost and, in November, will walk them through this process.
“You all have been hired to be the experts. Give us your expert opinion,” Phillips said. “We will vote on your said expert opinion.”
Jacob Sanchez is an enterprise journalist for the Fort Worth Report. Contact him at email@example.com or via Twitter. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.