The Ector County ISD Board of Trustees Tuesday night unanimously adopted the 2023-24 tax rate, decreasing the total tax rate by slightly more than 16-cents from the previous year.
That move, combined with the unanimous vote to pre-pay $34.4 million in existing debt, thereby eliminating $6.1 million in future interest payments, is part of the strategy to establish long-term financial stability for the school district and the community, a news release detailed.
ECISD leaders have made the decision to pay down existing debt as quickly as possible. With the decision Tuesday night to pre-pay and refund/refinance more existing debt this year, ECISD will have paid down more than $68 million of debt since 2020. The amount of future interest saved through pre-payments and refunding/refinancing – the finance tools that are available for bond debt service – tops $50 million.
“In 2012, our community overwhelmingly approved a bond proposal of $129 million,” ECISD Superintendent Scott Muri said in the release. “We are working to pay off that debt as quickly as possible. We believe that is the responsible thing to do for our taxpayers. We are paying off our community’s debt.”
At the same time, the early payments and refinancing are positioning the district to tackle major repairs and plan for new schools without the need to increase ECISD’s total tax rate.
As the state compresses the maintenance and operations tax rate for all school districts in Texas, an increase in the interest and sinking tax rate, which is one part of the district’s total tax rate, brings in more revenue that can only be used to pay down existing debt.
A school district’s tax rate is broken into two parts: Maintenance and operations (M&O) which provides funding for day-to-day operations; and interest and sinking (I&S), also known as debt service, which provides the funding for debt (bond) payments. The total tax rate for 2023-24 approved by the board breaks down as follows:
- $0.7596 for M&O – this rate is compressed down from $0.9810 last year
- $0.2544 for I&S – this rate is increased from $0.19692
- $1.014 total tax rate – a decrease from $1.17792
Other factors to consider when looking at ECISD’s long-range plan for funding schools: the district still offers a full 20% optional homestead exemption on top of the state exemption, very few school districts in Texas do this; voters will have the chance in the Nov. 7 election to vote to increase the state’s homestead exemption from $40,000 to $100,000; and several approved Chapter 313 agreements for new businesses that have the potential to significantly increase the tax base for Ector County, and that would, in turn, substantially increase revenue for ECISD without increasing the tax burden on homeowners.
“Our schools and our community deserve a focused, responsible plan for future growth and prosperity,” Muri said in the release. “Paying off debt early, creating the capacity to make repairs and build new schools without increasing our total tax rate is such a plan.
“We have seen continuous improvement in our students’ academic performance over the past several years; we have seen tremendous improvement in our ability to recruit, retain and reward teachers; and all of that work is supported by a reasonable and responsible financial strategy that will benefit Ector County tax payers over time. The future is indeed bright for Ector County Independent School District.”