Gov. Rick Perry today announced that the IRS has granted the state's request that they revise federal regulations that limited our state's ability to guarantee local school district facilities bonds with the Permanent School Fund (PSF). Today's ruling by the IRS aligns federal regulations with state law, allowing the state to back more bonds and save taxpayers money.
"The IRS' decision to grant our request will now allow the state to back more voter approved school district bonds, providing lower cost financing to secure adequate facilities for the schoolchildren of Texas, and easing the burden on local property taxpayers," Gov. Perry said.
In November 2007 and again in February 2008, Gov. Perry sent a letter to former U.S. Treasury Secretary Henry Paulson urging the IRS to increase its guarantee limitation to match the limit in Texas state law. The previous regulation limited the Texas PSF to guarantee school district bonds, resulting in Texas taxpayers unnecessarily paying millions of dollars in financing costs for the construction of school facilities. The governor reiterated his ongoing request in a letter to U.S. Treasury Secretary Timothy Geithner in July 2009.
State law guarantees up to five times the cost value of the PSF, double the previous IRS limit. With a PSF backed bond, districts receive a AAA rating on their facilities' bonds, resulting in lower interest rates and millions of dollars in savings to Texas taxpayers.
The State Board of Education, which oversees the PSF, will determine the appropriate level to increase the capacity, contingent on the PSF maintaining the AAA rating.