A Texas program that backs school districts’ bond debt is about to reach its limit — and it could mean raising taxes

A classroom at Ott Elementary School in San Antonio on Aug. 11, 2020. A state program that backs school districts' bond debt is close to reaching its limit. If it does, districts — and taxpayers — may have to pay higher interest rates on that debt. (Credit: Allie Goulding/The Texas Tribune)

A state-backed program that for decades has helped school districts get the lowest interest rates possible on bonds is about to reach its limit — and if it does, districts might find themselves having to ask for more money from taxpayers.

The Permanent School Fund is a state endowment of about $56 billion funded through investments and land holdings. It was created in 1854 to give Texas’ public schools another form of revenue other than tax dollars. Through its bond guarantee program, when a school district passes a bond package, the PSF promises lenders who buy the bonds that the state will pay them back if the school district can’t. Having the PSF as a guarantor helps school districts get the best interest rates on those bonds.