On Tuesday, voters in the El Paso Independent School District will decide whether to approve a change to the district’s local property taxes. The district has proposed a “penny swap” that would generate about $7 million.
While the proposal has been met with some opposition, the penny swap would bring much needed resources to our community. If the proposal passes, our publicly elected school board members would be responsible for holding district leaders accountable for how the funds are spent.
How does the penny swap work?
Property taxes are typically described in dollar terms, where a 1.07 percent property tax is the same as a tax of $1.07 for every $100 of property value. As with most states, districts in Texas raise funds through two types of local taxes, one is the maintenance and operations tax, or M&O, which pays for employee salaries and other ongoing expenses, and the other is the interest and sinking tax, or I&S, which pays for debt that districts take on for capital projects like school building construction and upgrades.
The EPISD penny swap proposal would move 10 “pennies” from I&S taxes to M&O taxes. The M&O rate would increase from $1.07 to $1.17 and the I&S rate would decrease from $0.24 to $0.14, with no change in the overall property tax rate that El Pasoans pay.
The Texas school finance system provides matching funds for low-wealth districts like EPISD and others in our region. But those matching funds are primarily for M&O tax revenues, not I&S tax revenues, so swapping pennies from I&S to M&O tax revenues brings significantly more money from Austin to El Paso.
There is a key issue missing from the recent discussion about the penny swap. The Texas school finance system is one of the least equitable in the country. In Texas, districts serving wealthier students receive more funding than those serving higher numbers of students in poverty. What does that mean for El Paso? In a recent policy brief published by the UTEP Center for Education Research and Policy Studies, we explained that our region is the most underfunded in the state.
While local school districts have found ways to target resources and create programs that promote success among El Paso students, bringing in additional funding, and ensuring that funds are allocated effectively, will strengthen and expand educational opportunity in our region.
David S. Knight, Ph.D. is the associate director of the Center for Education Research and Policy Studies and an assistant professor at the University of Texas at El Paso.