UnRAPPed | How School Debt Affects the Tax Rate

LISD believes in the importance of all stakeholders understanding the basics of how our district receives its funds, and where the funds are being allocated once they are collected. School finance is a complicated topic, but we’ve broken down a few important topics to give the community a snapshot of how public school funding works in Texas. In LISD, we advocate for as much of the taxpayer dollars as possible to remain in our district where they benefit the communities we serve.

HOW SCHOOL DEBT AFFECTS THE TAX RATE

Last spring, voters residing within Lewisville ISD boundaries saw three bond propositions on their election ballot for LISD - propositions A, B and C. UnRapp details about what projects are included in the Bond election in an earlier episode of this series, or visit lisdbond.com. 

You may have seen that even if voters approve these bond propositions, the tax rate will not change. But how is that possible?

Let’s simplify this with a comparison. Imagine you're a homeowner and several systems or components in your house, like your roof, air conditioning unit, and garage door, are reaching the end of their useful life. You’ve made repairs over the years, even decades, and now it’s not cost efficient, or possible, to continue to make repairs to these components, but rather time for a replacement. You take out a loan to cover these replacements, paying it down gradually. Later, when more components like your fence, refrigerator and oven need to be replaced, you can take on new debt without increasing your credit limit because you've paid down the previous loan. This cycle continues as replacements become necessary.

Now, scale this concept up to the size of Lewisville ISD, which spans 127 square miles and more than 9 million square feet of facility space. When major repairs or replacements are needed in our facilities after years of routine maintenance, the district seeks approval from voters for bonds to fund these projects. Similar to taking out a loan, the amount of overall debt increases. But thanks to LISD's conservative financial and debt management policies, existing debt has been paid down, ensuring no increase in the I&S tax rate is necessary to fund the bonds proposed in the spring election. Over the last decade, LISD has even paid off nearly 140 million dollars in debt early, saving taxpayers 19 million dollars in interest.

You may ask yourself, doesn’t the district have a savings account they set aside to pay for these types of projects? While the district does pay for routine maintenance and repairs through it’s M&O budget, the state of Texas has set up the school finance system in a way where public school districts do not receive funding to pay for major repairs and replacements, but rather are required to ask voters for their approval through bonds. We’ll dive deeper into the two buckets of school funding in another episode of UnRapped.

And that’s how school debt affects the tax rate, UnRapped!