Northwest ISD lowers tax rate, adopts plan to manage debt for FY 2026-27

What happened

According to previous Community Impact reporting, school districts levy property taxes based on $100 valuation for properties located within its district. The board approved a $1.0638 tax rate per $100 valuation for properties located within the district for the 2026-27 fiscal year, which breaks down as follows:

• $0.6428 for maintenance and operations
• $0.4210 for interest and sinking

According to district records, the district’s tax rate for the 2025-26 fiscal year was $1.0841 per $100 valuation which included:

• $0.6631 for maintenance and operations
• $0.4210 for interest and sinking

“In 2019, our tax rate was $1.49,” Chief Financial Officer Jonathan Pastusek said. “So that’s about a third decrease in our tax rate total since 2019.”

According to the Texas Education Agency, public school taxes involve two figures, which divide school district budgets into two buckets. The first bucket is the maintenance and operations budget, which funds daily costs and recurring or consumable expenditures, such as:

• Teacher and staff salaries
• Supplies
• Gas and utilities

The second bucket is the interest and sinking budget, also known as debt service, which is used to repay debt for longer-term capital improvements. This can include building new schools, which is approved by voters through bond elections.

Pastusek said keeping the I&S rate at $0.4210 is higher than what the district needs, but allows district officials to engage in its defeasance strategy to manage their debt.

Diving deeper

Defeasance, as outlined by Pastusek, allows school districts such as NISD several financial options including:

• Early debt retirement and interest savings: Defeasance allows a school district to place funds into an account to pay off existing bond obligations ahead of schedule, which lessens the interest burden on district taxpayers.
• Managing the interest and sinking (I&S) tax rate: Because the district collects revenue specifically allocated for debt service in its I&S fund, using surplus debt service funds for defeasance enables the district to manage its debt portfolio efficiently.
• Long-term financial flexibility: Paying down existing principal early frees up future borrowing capacity and reduces long-term debt liabilities as NISD navigates rapid student enrollment growth and future facility needs.

“If your current I&S rate that you would adopt will exceed the amount of revenue needed for that year’s payments, you have to do the [defeasance] order to do that,” Pastusek said. “It allows us to be able to collect that [revenue] in case we sell or refund [bonds] or we decide to pay the debt down early and it keeps our I&S rate steady.”