Irving ISD penny exchange could mean more in state funding

At its regularly-scheduled school board meeting on Monday, July 25, the Irving ISD Board of Trustees called a Tax Ratification Election (TRE) for Sept. 10.

Irving ISD officials believe an additional $10 million in state funding is available. However, in order to claim it, the district must seek approval from its taxpayers.

Like other large North Texas school districts, Irving ISD is facing increased operational costs without any projected increase in revenue from the state. Furthermore, with the recent school finance system being ruled constitutional and limited additional funding for the 2016-2017 school year in sight, providing for teacher and staff salary increases and maintaining facilities under the current state aid structure could create a deficit budget without additional resources.

School district tax rates are made of two components:

M&O: The largest part, the maintenance and operations (M&O) rate, is used to fund the daily operations of the district such as salaries, benefits, transportation and curriculum materials.

I&S: The second part, the interest and sinking rate (I&S), is used to pay for bonded debt.

Together, the M&O and I&S rates make up the total tax rate.

Through a penny exchange – moving pennies from the I&S tax rate to the M&O tax rate – Irving ISD officials estimate the district could receive more than $10 million in additional state aid from Austin while maintaining the same overall tax rate for its local taxpayers. The additional $10 million in state revenue could be used for teacher and staff salaries and for the district to maintain its low class sizes, instructional resources and facility maintenance, outside of having to call a bond election.

“The state matches more money when districts bring in M&O dollars than when a district taxes I&S dollars,” said Jose Parra, Ed.D., Irving ISD superintendent of schools. “By changing the tax structure to bring in more M&O dollars than I&S dollars, state funding is increased. The most we can raise our M&O rate is 13 cents by law. However, by raising the M&O rate 13 cents and then lowering the I&S rate by the same 13 cents, our CFO has calculated we could bring in over $10 million a year without an overall tax rate increase.”

If approved by voters, the M&O rate will be 13 pennies higher. On July 18, the Irving ISD Board of Trustees, by ordinance at a special-called meeting, lowered the I&S rate 13 pennies if the voters approve the 13 penny increase to the M&O rate. In order to receive the extra state funding, the district is asking voters to become informed and exercise their right to vote in a tax ratification election (TRE) called for Sept. 10. If approved by voters, the penny exchange will allow the district to exchange 13 cents from the debt service fund to the maintenance and operations fund – raising the M&O rate 13 cents and lowering the I&S rate by the same amount – thereby maintaining the same total tax rate.

Currently, Irving ISD has an M&O rate of $1.04 and an I&S rate of $0.405 for a total tax rate of $1.445. Irving ISD officials are asking voters to consider approving an increase to the M&O rate to $1.17. The Board will then decrease the I&S rate to $0.275 for the same $1.445 total tax rate. For each penny of effort the district levies for the M&O tax rate, the more funding the state will contribute for general operations. The increased 13 cents on the M&O rate is calculated to bring the district an extra $10 million after providing for the required debt service payment.

Irving ISD Tax Rate Summary for Penny Exchange



Without TRE


With TRE



2015-2016 to 2016-2017

M&O Rate $1.0400 $1.0400 $1.1700 increase $0.13
I&S Rate $0.4050 $0.4050 $0.2750 decrease $0.13
Total Tax Rate $1.4450 $1.4450 $1.4450 total change $0
Added M&O Dollars for Irving ISD $0 + $10 million + $10 million

Note: Tax rates are per $100 of valuation.

M&O = Maintenance & Operations, I&S = Interest & Sinking


“No debt payments will be changed or extended under this arrangement,” Parra said. “Our taxpayers are guaranteed our debt payments will be paid the same with or without the tax exchange. The tax exchange simply brings us $10 million more for operations from the state, and that’s money we would not receive under our current tax rate structure. If the voters allow us to increase the M&O rate, more than $10 million dollars currently in Austin will be available for Irving ISD without changing the overall tax rate for our taxpayers.”

Some voters may question why an election is necessary if the overall rate will be the same. In order to set an M&O tax rate over $1.04, state law requires voter approval. The M&O pennies bring in the most state funding. A district may tax up to $1.17 total, but taxing any of the additional 13 pennies over $1.04 requires voter approval. No approval is needed for the Board of Trustees to lower the I&S rate; therefore, there is no need for voters to authorize the planned change in the I&S rate.

“This potential for increased funding comes at a time when we are seeing very little additional state aid,” Parra said. “This is an opportunity to increase teacher and staff salaries, maintain our lower class sizes and maintain our buildings without a bond election, which would increase the tax rate. It truly is more funding for the district if voters approve the penny exchange. It’s new money completely available to help with district services and operations in the 2016-2017 budget year without raising the total tax rate.”

In order to receive the additional state funding, the school district is asking voters to become informed and exercise their right to vote in the Tax Ratification Election on Sept. 10.