Eanes ISD
Penny Swap & Drop

General Questions

What is the Penny Swap & Drop?

The Penny Swap & Drop, also known as a tax ratification election (TRE) adds more funds to the district’s operating budget by swapping two cents from the district’s interest and sinking (I&S) tax rate to the district’s maintenance and operations (M&O) tax rate, changing the M&O rate from $1.04 to $1.06 per $100 valuation and reducing the I&S rate from $0.1725 to $0.14 per $100 valuation. The district’s overall current tax rate of $1.2125 would drop to $1.20 per $100 valuation. If voters do not approve the penny swap proposal the overall tax rate will remain at the current higher rate of $1.2125 per $100 valuation. Approval by voters would generate an estimated additional $3 million of local tax revenue that stays in the community for school operations.

Why did the Board call for a Penny Swap & Drop?

The approach is intended to help Eanes ISD meet its shared commitments to the children of Eanes ISD and the entire community. Each year Eanes ISD sends more money back to the state than it keeps because of recapture. The Penny Swap & Drop increases the amount of local dollars Eanes ISD is able to keep in the district for operations.

The district has sent nearly $1 billion of local tax receipts to the state through the current Texas school funding formula requiring property-wealthy districts like Eanes ISD to pay back (called recapture) any amount of property taxes collected over and above an equalized wealth level established by the legislature. In the 2016/17 fiscal year, Eanes ISD residents paid more operations tax dollars to recapture ($83.3 million) than they kept ($57.7 million) to fund the district’s operating budget.

What are the Shared Commitments to the community?

This proposal, should it be approved by the voters in November, would allow the community of Eanes ISD to increase the amount of local revenue in Eanes ISD and therefore help to ensure the community's shared values to:

  • attract and retain high-quality staff;
  • maintain reasonable class sizes;
  • continue programs the community enjoys and expects.

For the community members who do not have children in Eanes ISD, this proposal, if approved, will lower the Eanes ISD overall tax rate in a fiscally responsible manner.

How will the Penny Swap & Drop benefit the District?

Approval by voters would generate an estimated additional $3 million of local tax revenue that stays in the Eanes ISD community.

What is a Golden Penny?

In Texas, school districts can set an M&O tax rate up to $1.17 per $100 of valuation. This possible M&O rate is divided into three distinct tiers based on the recapture level for Chapter 41 (Robin Hood) districts.

Tier 1 covers the first $1.00 of the M&O tax rate and if school districts exceed a specified wealth level per student, they must send tax receipts generated from the excess wealth per student to the state. All of the recapture that Eanes ISD pays ($83.3 million in 2016-17 and an estimated $94 million in 2017-18) is based on this first $1.00 of M&O taxation.

The second tier covers the next $0.06, known as the Golden Pennies because tax receipts collected from these six pennies are not recaptured. In 2017-18 each of Eanes ISD’s golden pennies is worth approximately $1.45 million. For comparison sake, each penny in tier 1 is worth about $500,000 after recapture is paid.

The final tier, which encompasses the 11 pennies between $1.06 and $1.17 are known as the copper pennies because they are recaptured at an even higher rate than Tier 1. In fact, after recapture, one copper penny provides less than one quarter of the net revenues provided by a golden penny. For this reason, the Board does not believe that copper pennies are a good value for Eanes ISD and its voters and has no plans to access them.

To provide some perspective, in 2006 most school districts in Texas had an M&O tax rate of $1.50. The school finance reform that was implemented between 2006 and 2008 compressed M&O rates to lower tax rates. Following compression, school districts were allowed to access up to four golden pennies without seeking voter approval; most districts, including Eanes ISD, chose to do that. In order to access an M&O tax rate above $1.04 (Eanes ISD’s current rate), districts must seek voter authorization through a TRE. The Board of Trustees is seeking voters’ consent to access the two remaining golden pennies which would increase operating revenues for the district by approximately $3 million in 2017-18 and more in subsequent years.

What language will be on the ballot?

The ballot language for the Penny Swap & Drop may be confusing to voters due to the technical language required by law. Please see the sample language voters will see on the ballot.

Eanes Independent School District Tax Ratification Election

Approving the ad valorem tax rate of $1.20 per $100 valuation in the Eanes Independent School District for the current year, a rate that is $0.02 higher per $100 valuation than the school district rollback tax rate, for the purpose of (i) accessing additional local operating revenues and (ii) decreasing the overall ad valorem tax rate by $0.0125.

Voting “for” the Penny Swap & Drop will authorize the increase of the maintenance and operations tax rate and the decrease the interest and sinking fund rate, resulting in an overall reduction in the total tax rate.

Voting “against" the Penny Swap & Drop will cause the Eanes ISD total tax rate to revert to the current rate of $1.2125.

Tax Information

How can Eanes ISD afford to drop the tax rate?

For years, Eanes ISD has been dedicated to operating as fiscally responsible as possible and paying down debt quickly. As the District accelerates repayment of its debt, it has accrued substantial savings on interest payments. Eanes ISD is now at the point where it has paid off enough debt so it can drop the I&S rate, and simultaneously access the “Golden Pennies.”

Another contributing factor relates to the increased assessed valuation in the Eanes ISD community.

How will the Penny Swap & Drop affect taxes for homeowners?

The Penny Swap & Drop adds more funds to the district’s operating budget by swapping two cents from the district’s I&S tax rate to the district’s M&O tax rate, changing the M&O rate from $1.04 to $1.06 per $100 valuation and reducing the I&S rate from $0.1725 to $0.14 per $100 valuation. The district’s overall current tax rate of $1.2125 would drop to $1.20 per $100 valuation.

If voters do not approve the penny swap proposal the overall tax rate will remain at the current higher rate of $1.2125 per $100 valuation.

See tax impact chart.

If a homeowner’s tax payment is frozen, they may not see a decrease - the amount of their tax payment, by State law, will stay at the frozen dollar amount unless the lower tax rate results in a lower payment. See “How will this affect homeowners over 65 who have their taxes frozen?” (below).

How will the Penny Swap & Drop affect taxes for businesses?

If approved, the decrease in the overall tax rate would also apply to businesses in Eanes ISD. Businesses would see a decrease in the overall tax rate at $1.20 per $100 valuation.

If voters do not approve the penny swap proposal the overall tax rate will remain at the current higher rate of $1.2125 per $100 valuation.

How will this affect homeowners over 65 who have their taxes frozen?

If a homeowner’s tax payment is frozen, they may not see a decrease - the amount of their tax payment, by State law, will stay at the frozen dollar amount unless the lower tax rate results in a lower payment. (If a homeowner has had their taxes frozen recently, depending on how high their appraised value increased, they could see a decrease.)

What is the history of Eanes ISD's tax rate?

Eanes ISD has held a $1.2125 total tax rate since 2011. The rate is the second lowest in the Central Texas area.

What do the "Effective" and "Rollback" tax rates represent?

As a part of its Truth in Taxation calculations, school districts are required to determine both their Effective Tax Rate and Rollback Tax Rate. The Effective Tax Rate is the rate the district would need to levy to bring in approximately the same amount of available tax revenues in the current year as it did in the previous year.

Typically, in a rising property value market, the Effective Tax Rate will be lower than the previous year’s tax rate. However, Eanes ISD’s current Effective Tax Rate is higher than its 2016-17 adopted rate because our recapture rate will increase by more than our projected tax collections at last year’s rate.

The Rollback Tax Rate places a limit on the tax rate that can be adopted without seeking voter approval through a Tax Ratification Election (TRE). Even though the total tax rate the Board adopted in August is lower than the total Rollback Tax Rate, the M&O portion of the adopted tax rate is higher than the M&O component of the Rollback Tax Rate, necessitating the TRE called for Nov. 7, 2017.

State Funding

How is Eanes ISD funded?

Eanes ISD is funded primarily through local school property taxes, supplemented with money from the state, based on a per-student formula that takes into account special circumstances, such as limited English proficiency, special education, etc. How much a district can tax is dictated by the State, and because Eanes ISD is a recapture, or Robin Hood, district, the State receives a large portion of local tax dollars.

Further, as local tax revenue per student goes up, the State’s portion of funding goes down.

What is M&O versus I&S taxes?

The Maintenance and Operations fund (M&O, also known as General Fund) is used to pay for the day-to-day operations of the district, including payroll, programming, maintenance, security, supplies, etc. Recapture (Robin Hood) is paid from the General Fund, reducing the dollars available for district operations.

The Interest and Sinking fund (I&S, also known as Debt Service Fund) pays for the district’s debt, taken on through the sale of bonds for capital improvement projects such as school renovations, technology and school buses. I&S funds can only be used to repay bonds – they cannot be used for operational expenses such as salaries.

How much has Eanes ISD sent to the State in recapture?

The district has sent nearly $1 billion of local tax receipts back to the state through the current Texas school funding formula requiring property-wealthy districts like Eanes ISD to pay back (called recapture) any amount of property taxes collected over and above an equalized wealth level established by the legislature. In the 2016/17 fiscal year, Eanes ISD residents paid more dollars to recapture ($83.3 million) than they kept ($57.7 million) to fund the district’s operating budget.

Voting Information

When is Election Day?

Election Day is November 7, 2017. The last day to register to vote in this election is October 10. Early voting runs October 23 - November 3.

Where do I find voting information or where to vote?

Please visit the Voting Information page for voting locations in the Eanes ISD community.

General information on the November 7, 2017 election information is online at www.votetravis.com.

The last day to register to vote in this election is October 10. Early voting runs October 23 - November 3.

What language will be on the ballot?

The ballot language for the Penny Swap & Drop may be confusing to voters due to the technical language required by law. Please see the sample language voters will see on the ballot.

Eanes Independent School District Tax Ratification Election

Approving the ad valorem tax rate of $1.20 per $100 valuation in the Eanes Independent School District for the current year, a rate that is $0.02 higher per $100 valuation than the school district rollback tax rate, for the purpose of (i) accessing additional local operating revenues and (ii) decreasing the overall ad valorem tax rate by $0.0125.

Voting “for” the Penny Swap & Drop and will authorize the increase of the maintenance and operations tax rate and the decrease the interest and sinking fund rate, resulting in an overall reduction in the total tax rate.

Voting “against” the Penny Swap & Drop will cause the Eanes ISD total tax rate to revert to the current rate of $1.2125.

Community Engagement

Where can I learn more about the Penny Swap & Drop?

Eanes ISD is offering several opportunities to learn more about the Penny Swap & Drop. Please visit the Scheduled Presentations link on this website for dates and times or to request a presentation for a group.

Can I schedule a presentation for my group/neighborhood?

Yes. Eanes ISD is offering several opportunities to learn more about the Penny Swap & Drop. Please visit the Scheduled Presentations page for dates and times.

We are continually scheduling presentations so check this site often. If you would like to have a presentation with your neighborhood or group, please contact cmcwhorter@eanesisd.net.

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