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Dallas ISD Stuck With $2 Million Bill in Dallas County Schools Land Deal

NBC 5 Investigates has uncovered new information about who's really paying for a controversial land deal at Dallas County Schools — and it's not just taxpayers.

You'll likely remember DCS, the financially troubled school bus agency, sold its school bus lots to get $25 million in quick cash.

But since DCS still needed bus lots, the agency leased them back from the new owner. That leaseback will cost taxpayers $47 million over 20 years — $47 million in expenses on land that Dallas County taxpayers used to own free and clear.

Now NBC 5 Investigates has discovered it's not just Dallas County Schools taxpayers who got stuck with that bill — the Dallas Independent School District, DCS' single-largest customer, was also stuck with a $2 million tab.

So, money the Dallas ISD could have spent educating children instead wound up paying for a deal the district had nothing to do with.

NBC 5 Investigates obtained copies of DCS' billing records and what we found angered some top officials at the Dallas ISD.

"And then they turn around and pass that expense on to us, without our approval? It's pretty appalling," said Dustin Marshall, Dallas ISD trustee.

The records show DCS raised the price of busing Dallas ISD students by millions of dollars in order to cover the costs of a questionable land deal.

In 2015, DCS billed the Dallas ISD about $159,000 for "leasing expenses" related to busing students. But in 2016, billing records show those leasing expenses suddenly jumped to more than $2 million.

That extra $2 million covered the yearly lease payments DCS now owes on its bus lots — the same ones the troubled agency sold and then leased back from the new owner.

DCS did the deal to get some quick cash at a time the agency was sinking into deep financial trouble.

Video recorded by a blogger who attended a 2015 DCS board meeting shows then-superintendent Rick Sorrells talking about the agency's plans to pass on the costs of the land deal to the school districts DCS serves.

"Even though the source of payment for that is going to be from the districts, not our funds," Sorrells says in the video.

But Dallas ISD officials told NBC 5 Investigates they were unaware the land deal was the reason for the jump in their yearly bills.

"I think it was disrespectful," said Michael Hinojosa, Dallas ISD superintendent.

Earlier this year, Hinojosa said he planned to look into the situation.

"I don't think it was fair. So certainly we will be working with that. We are their largest customer, so we would hope to be treated with respect," Hinojosa said.

In a more recent interview two Dallas ISD board members told NBC 5 Investigates they are trying to see if there is some way to recoup the money they believe they were wrongly charged.

"If there is a way to challenge the validity of it, and the sale itself, that would be great, however Dallas ISD didn't sign the deal. It's not within the purview off what we do," said Edwin Flores, Dallas ISD trustee.

Now, DCS said it is also rethinking the deal. Interim DCS Superintendent Gary Lindsey told NBC 5 Investigates, "These agreements do not represent or reflect the values and priorities of DCS today. The new leadership is committed to ensuring taxpayer money is spent effectively and plans to revisit the leaseback agreements. Our intention is to continue to work with DISD to find a mutually agreeable method of cost determination and allocation."

Both sides have acknowledged the current billing process DCS uses is complicated. That's apparently why Dallas ISD said it didn't realize the $2 million increase was related to the land deal.

As NBC 5 Investigates first reported, DCS used some of the cash it got from the land deal to buy more school bus cameras for a program that put DCS in deep financial trouble.

Our reporting prompted some Texas lawmakers to call for a criminal investigation. Sources told NBC 5 Investigates the FBI and the Texas Rangers are now looking into what happened to the finances at DCS.

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