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EPISD projects lower tax rate, homestead exemptions and bond defeasance will shape 2026 budget outlook
Summary
El Paso ISD staff told trustees that rising property values, a $100,000 homestead exemption, potential legislative increases to that exemption and recent bond defeasance will materially affect next year’s revenue and debt service planning.
El Paso ISD officials told the school board at a March budget workshop that higher property valuations, state homestead exemptions and a recent defeasance of bonds will shape the district’s revenue picture for fiscal 2026. Martha Aguirre, chief financial officer, and Walt Byers, the district treasurer, outlined projected tax rates, state hold‑harmless payments and the district’s recent debt management steps.
The district’s average market value for properties inside EPISD boundaries was shown as $250,884, and staff are projecting a maximum compressed tax (MCR)‑driven maintenance and operations (M&O) tax rate of 0.7699 for next year versus 0.8263 this year, officials said. With the $100,000 homestead exemption enacted in 2023, the presentation showed a sample homeowner tax liability of about $1,161 for school purposes on that market value.
Why it matters: property valuations set both local M&O revenue and the state’s Foundation School Program (FSP) offsets. As El Paso property values grow, the state reduces its Tier‑1 funding; that interaction — the “interplay between local property taxes and state appropriations,” a quote the presentation attributed to TEA Commissioner Mike Morath — affects how much local revenue the district can raise without voter approval.
Staff emphasized that early valuation figures are projections. The district receives preliminary values from the El Paso Central Appraisal District (CAD) at the end of April and certified values in late July; tax rates are adopted in August. Aguirre said the district will use conservative revenue assumptions in its budget and noted that, while CAD reported a roughly 11% valuation increase, the district historically models a lower final revenue impact (closer to 5–6%) when preparing its budget.
On debt service, trustees were reminded that the district used excess I&S (interest & sinking) fund balances to defease roughly $22 million in bonds, a move staff said reduced interest costs by about $20 million and supported maintaining the district’s AA bond rating. Byers explained the district chose to keep the I&S tax rate steady and apply excess revenue to pay principal rather than lower the rate, which preserved capacity and strengthened the district’s debt profile.
Officials also reviewed how Tier‑2 enrichment pennies work: the presentation estimated about $56 million in Tier‑2 revenue, with eight “golden pennies” yielding roughly $48.2 million and the copper pennies producing roughly $7.8 million. For the forecast year staff showed approximately $313 million in state FSP funding and $148.4 million from local M&O taxes for a combined FSP total of about $462.4 million.
Aguirre and Byers repeatedly cautioned that many figures remain forecasts until final valuations and any legislative changes are settled. They said the board will see updated revenue forecasts in subsequent workshops and that any significant changes would be reported to trustees as soon as staff had reliable numbers.
The presentation closed by noting that property valuations can change during appeals and that the district’s audit cycle continues into November because some final figures arrive after the fiscal year ends.
