The Irving School District recently passed a new tax plan known as the Penny Exchange. This plan will move tax ‘pennies’ from the Interest and Sinking tax rate to the Maintenance and Operation tax rate. The plan will result in an additional $10 million or more in state funding.
So, what does this mean for you as a student? To understand the effects of the exchange, it is important to understand the plan itself.
“The resolution of the TRE/“Penny Exchange” allows the district to restructure (reorganize) the city’s tax rate and collect taxes in a slightly different manner (i.e. not raising the tax rate of Irving residents),” Economics Teacher Angela Ayers said. “The funding of a school district is a complex process with funds being collected/drawn from three sources: local (City of Irving), state (Texas) and federal funding (USA).”
At the local level, funding is drawn from property taxes. In Irving ISD, this tax rate is $1.575 per $100 of property evaluation. So, if you own a property valued at $1000, then you would pay $15.75 every year.
The new plan will not change property tax rates, so the $1.574 will not change. If my property is still valued at $1000, the new plan will leave my tax rate at $15.75 per year. So this raises the following question: If the local tax rate is unchanged, how does this plan result in increased revenue?
“I definitely think it will help the district. And seeing as how it won’t change any tax rate, I can’t see why anyone would vote against it,” Junior Ariel Masters said.
As the name implies, the plan will exchange pennies by moving 13 of them from the district’s Interest and Sinking (I&S) tax rate to its Maintenance and Operations (M&O) tax rate. As the state gives more funding for M&O pennies then it does for I&S pennies, this will result in increased state funding of approximately $10 million annually.
“The “Penny Exchange” is purely a “numbers game” where we are changing the “property” of money from one format to another,” Ayers said. “In simple terms, money equates to water. Water, as we all know, has three forms: solid, liquid and gas. We are basically funneling money from one state to another (from water to solid; from gas to liquid, etc”).
So what will the district do with this $10 million? This money will go towards employee compensation and benefits, student success initiatives such as additional instruction, summer programs, early childhood education, capital expenditures such as buses, HVAC and energy efficiency, and savings for future costs. In short, this money will be used for just about everything.
“This plan is a win-win situation,” Cummings said. “While we will be getting more revenue for the district, we will not be increasing property taxes. When I looked at the plan, I didn’t see any downsides. I think it will be good for our kids.”
Graphs courtesy of Irving Independent School District.