Tax Impact - $459,795,000 Authorization
The above chart illustrates the impact of the $459,795,000 authorization on the tax rate in future years. The green area represents the district’s existing debt, while the blue area represents the $459 million authorization. The yellow represents the district’s capacity to take on additional debt based on a $.50 ceiling.
It is projected that taxes will increase from the current $.40 rate to $.41 in September 2011 and then to $.44 in September 2012. For a homeowner, every $.01 increase in the tax rate equals a $10 per year increase for every $100,000 in taxable value.
Example
| Average Market Value |
$198,271.00* |
| Less Homestead Exemption |
($15,000.00) |
| Equals Average Taxable Value |
$183,271.00 |
*Average value of a house located in Katy ISD.
Debt Management
A long range debt management plan is based on many factors, both known and unknown. Economic growth, interest rates, inflation, state funding, demographics, current and future debt, tax rates, etc., are many of the components that go into developing a long range plan. A plan is designed or redesigned as each bond authorization is developed. The plan is then evaluated periodically, normally annually, and updated as individual bond sales are planned and issued. The district is currently in the fourth year of the plan that was developed for the 2006 authorization and has no authorized unissued bonds remaining from the $269 million authorization.
Read more about Katy ISD's Debt Management Plan.
Bond FAQ's
What are bonds? How long does it take to pay them off? Bonds for school projects are very similar to a mortgage on a home. To finance construction projects, the district sells bonds to investors who will be paid principal and interest. Payout is limited by law to 40 years.
How do bonds work? The sale of bonds begins with an election to authorize a specific amount – the maximum the district is allowed to sell without another election. The school district sells them as municipal bonds when funds are needed for capital projects – usually once or twice a year. Bids are taken from interested buyers, usually large institutional investors – and are sold at the lowest interest rate offered. The rate is based on the district’s bond rating – the higher the bond rating, the lower the interest rate to sell the bonds. Principal and interest on the bonds are repaid over an extended period of time with funds from the Debt Service tax rate.
How can bond money be used? Proceeds from a bond issue can be used for the construction and renovation of facilities, the acquisition of land and the purchase of capital items such as equipment.
What, other than bricks-and-mortar, is typically included in a facility referendum? A referendum may include money for technology, buses, land for future schools, portable buildings and the cost of selling bonds.
Why are bonds used to finance non-facility items? It is a financial advantage to the district to pay for some capital expenditures such as technology, buses, land and portable buildings with bond money rather than from the General Fund. First, the cost of the purchases can be spread over the life of the asset rather than coming from a single year’s General Fund. In addition, taxes that are levied for bonded debt are not subject to the same recapture formulas that reduce state funding based on General Fund tax revenues.
The district sells bonds that mature at different times, so bond expenditures for items with a shorter lifespan – such as computers – are paid off before the purchase becomes obsolete.
What is a bond election? A school bond election gives individuals an opportunity to vote on paying for the construction and renovation of school facilities. It is a request to give the elected Board of Trustees the authority to sell bonds when facilities are needed.
What is the difference between a bond authorization and bond sales? A bond authorization specifies the amount of bonds the District is authorized by the voters to sell. Bond sales may occur over a period of time with the date and amount of each sale determined by the Board on an as needed basis.
If the bond election is passed, does the school district immediately incur the debt? The bonds do not cost the district anything until they are sold. Even though the voters approve the bond issue, there are not costs incurred until the bonds are sold.
If the bonds are approved, is the district obligated to spend the money? No. Voter approval is an authorization for the district to issue bonds. They will be sold in the future only when funds are needed.
Will Katy ISD be able to sell its bonds at a favorable rate? Katy ISD’s bonds should receive the highest possible rating due primarily to the guarantee by the Texas Permanent School fund. Because of the high rating and the current low interest rates, the District expects a favorable market for its bonds. Katy ISD’s bond ratings put Katy in the top tier of Texas’ most credit-worthy school districts.
How will this bond election affect homeowners who are over 65? School district taxes on resident homesteads are frozen in the year the taxpayer turns 65 year of age and will not increase as a result of a school bond election.