Swap and Drop FAQs
What is Wichita Falls ISD’s Tax Rate Swap & Drop?
In Texas, the statutory maximum maintenance and operations (M&O) tax rate for a school district is $1.17 per $100 in property valuation, and districts have to put it to a community vote – called a Tax Ratification Election – to raise the rate above $1.04. Wichita Falls ISD is currently at that $1.04 M&O tax rate – as it has been for more than 10 years – and such a move would net the District an additional $1.4 million in annual revenue.
At the same time, the District is in a position to correspondingly lower the interest and sinking (I&S) portion of its tax rate due to increases in property values, fiscally responsible refinancing, and paying off the principle.
This plan would create an overall tax rate of $1.17, representing a decrease of $0.05 over Wichita Falls ISD’s current rate while bringing in an additional $1.4 million in revenue for the District.
What does Wichita Falls ISD's current financial situation look like?
The state of Texas school district funding formula currently assigns Wichita Falls ISD $8,040 in revenue per student. This figure ranks Wichita Falls ISD 33rd from the bottom out of the 1,017 public school districts in the state of Texas when it comes to revenue per student.
How will “swapping” the two tax rates result in $1.4 million in additional net revenue?
School district revenue in Texas is collected from two different tax rates and in two different funds – interest and sinking (I&S) which can only be used to pay down a district’s debts from selling bonds for capital projects, and maintenance and operations (M&O) which pays for the district’s operating expenses and can be used for anything (including paying off debt, if needed). Wichita Falls ISD is at the statutory maximum M&O rate without voter approval ($1.04) and cannot realize additional revenue for its operating budget without increasing that rate.
The fact that the District has made fiscally responsible refinancing decisions and local property values have increased over the last several years, puts Wichita Falls ISD in a position to lower its I&S rate and still maintain its existing debt payment schedule while keeping capacity for future bond elections.
Thirteen cents ($.13) of M&O generates $1.4 million more revenue than eighteen cents ($.18) of I&S taxes due to the state supplementing the M&O revenue for the district.
What assurances does the community have that the Board will not raise the I&S tax rate again? Could it do so without a community vote?
Wichita Falls ISD's Board of Trustees has provided the community with the assurance of its intentions to lower the I&S tax rate by $0.18 and to continue to look for additional opportunities to lower the tax rate. For starters, the ballot itself includes language that states that a vote for the resolution is for the purpose of “maximizing state funding for maintenance and operations. If voters approve the $1.35 tax rate, the Board of Trustees will reduce the I&S rate by $.18, to reduce the total tax rate to $1.17, which is less than the tax rate from 2018-2019.”
The Board can adjust the I&S tax rate as needed to meet the District debt service obligations. However, the Board has said they will not do that.
If this passes, is the state funding guaranteed?
School districts in Texas are funded using a formula generated through multiple legislative sessions. WFISD receives the same per-pupil funding each year. So, if we did not receive the state funds, we would not be able to operate our schools. So yes, the funds are guaranteed as much as school funding is guaranteed.
If WFISD voters approve the TRE, what guarantees the District will actually lower the I&S rate to $1.17?
The WFISD Board of Trustees, through the passed ordinance setting the tax rate at $1.35 and triggering the election, agreed to lower the I&S tax rate from $0.18 to $0.00 and levying a $1.17 M&O tax rate. A $0.05 tax reduction.
What prevents the District from going ahead with another bond to increase the I&S rate up to $.18 to the $1.35 rate if the TRE passes?
The district is not prevented from having a future bond election to address facility needs. It too would require voter approval.
Why wasn’t this done previously?
Tax ratification elections are difficult to explain and we also have a difficult time passing things in Wichita Falls. However, new district leadership has explored new ways of increasing revenue in Wichita Falls ISD.
When I’m in the voters' booth, what will the ballot language look like?
The ballot language is listed as “For” or “Against.”
When the bond election comes through in the fall will that not raise taxes?
If voters approve a bond proposal in the Fall, the tax rate would increase to the tax rate outlined in the bond proposal. The school board is still in the process of creating a long range facility plan and bond proposal. Therefore, there is no bond proposal at this time and we do not know a proposed tax rate for a future bond.