Argyle ISD is releasing a series of informational messages to help provide more clarity to the state of the district financially and the future as it relates to enrollment growth and capital needs. The second of four Question-and-Answer communications from Argyle ISD will help provide more information for taxpayers regarding the district’s management of debt.
The district has a rapidly growing tax base that has the capacity to absorb additional debt. Since the fiscal year 2012, the district’s net taxable assessed valuation has grown from $997 million to $2.469 billion, representing a 10.1% average annual growth rate. Since the fiscal year 2017, the average annual growth rate has been 15.6%.
Additionally, during Argyle ISD’s 2017 Bond Election, the district projected a maximum Interest & Sinking Fund tax rate of $0.5000. Argyle ISD was able to sell the bonds from the 2017 election and maintain a $0.45800 tax rate, which outperformed projections.
What is Argyle ISD's Interest & Sinking (debt service) tax rate? The Interest & Sinking Tax Rate (Debt Service) has remained the same for the past four school years at 0.48500. The I&S rate increases in 2014-2015 (.47000) and 2017-2018 (.48500) were a result of voter-approved bond elections and both remained under the I&S tax rate cap of 50 cents.
What causes a district to take on debt for construction? Very similar to an individual who needs to borrow money to construct a home, school districts borrow money to build schools. Most families simply do not have the available funds to build or purchase a new home without a mortgage. This same concept also applies to school districts. School districts simply do not have the financial resources available to pay for large capital expenditures (building new schools, renovating schools) without taking on debt.
What has the district done to pay off debt? The district has actively managed its outstanding debt profile. Argyle ISD has executed seven refinancings and one cash prepayment over the last 11 years, generating approximately $17.5 million in gross debt service savings. When interest rates are low or decline, a family will often refinance their home mortgage to take advantage of these lower interest rates. Much like that family, Argyle ISD has prudently managed the district’s outstanding voter-approved bonds.
What can cause Argyle ISD to have increased debt? Argyle is like many fast-growth districts across the state. While managing rapidly growing enrollment, the debt profile is elevated to address capital projects needed to provide educational learning space for additional students. As Argyle ISD’s enrollment grows the debt ratio will decline and will fluctuate over time based on growth and capital project needs. Also, the ratio of debt and student enrollment numbers are not figures the state examines regarding a district’s financial accountability.
Is the District's Interest & Sinking tax rate subject to recapture? No, the district's I&S tax rate is not subject to recapture. The district keeps 100% of the property taxes collected from I&S or debt service portion of the district's tax rate.