Page 6 THE BATTALION
THURSDAY, MARCH 22, 1979
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Bryan school board [S
backs tax-free bonds I
By REGINA MOEHLMAN
Battalion Reporter
The Bryan Independent School
District is urging Congress to keep
the Internal Revenue Service from
ending the tax-free status of school
bonds.
The commissioner of the IRS has
proposed a revision of the regu
lations regarding the tax-free status
on school bonds and the practice of
arbitrage. (Arbitrage is the practice
by which school districts make long
term investments with unspent
monies generated by bond sales.)
The interest the school district
earns with the investments and the
interest bond buyers earn is tax-free.
The new IRS regulations propose to:
1) eliminate the tax-free status of
school bonds and 2) tighten arbitrage
regulations by limiting the interest
and time-length allowed on these in
vestments.
The BISD this week unanimously
adopted a resolution stating that the
new IRS rules “would be undesir
able and unfair to taxpaying citizen-
s...would result in hindrances and
potential harm to the ability of school
districts to raise revenue.”
The resolution was sent to Texas
Senators Lloyd Bentsen and John
Tower, and U.S. Rep. Phil Gramm
of College Station.
The school district hopes to apply
pressure to the IRS through congres
sional channels, Superintendant
Wesley K. Summers said.
According to Summers, the IRS
has the power to change its regu
lations as it chooses—its only deter
rent being congressional pressure.
Summers described the BISD
resolution as an effort to “stop the
bureaucratic changes that happen by
an agency that Congress never asked
for.”
Summers said the IRS is acting
because “we (the school districts) are
investing our money more wisely
now.” The government bodies are
trying to make as much money as
possible to save the taxpayer more
money, he added.
t<
t<
n
pi
Government bodies make
through tax-free interest. Sui
explained interest rates affect
district monies this way: If a
board sells bonds with an 8 pe
interest rate and invests the
money at a 12 percent interest] Men
the district makes a 4 percent;* has!
giving it added operating capitj Stud
The school district usuallyi for i
only 1.2 — 1.3 percent inte tion
Summers said. I t’s when the hid Tl
ferences come in interest rateij to a r
the IRS becomes interested,h that
“They (the IRS) weren’t« servi
about it when the interest ratf]rial,
down and they won’t be u ingc
when it goes back down,” SraTexa
said. give!
Summers said the BISDistJlhe
to invest money as best itcantoirespi
hedge inflation. If the ret spon
goes into effect it could cost!: bill s
trict $1(X).0()0 in the future. Sal
A&M TRAVEL SERVICE
wishes to announce an addition
to the staff:
s
trict $100,000 in the future.il Tl
mers said. Investors will notklplanl
terested in buying school boiidiscc
they are not tax-free, he addellthe s
BISD usually puts the it and i
money it earns back into
nance of the buildings for whidKA V
bonds were originally sold hedg
mers said. This upkeep help< with
expensive major repairs g 1 " 011
would otherwise fall on thetas^ffi
he added. presi
Without public awarenes admi
lation changes usually go u ignat
until it is too late. Summersfifeb
Summers said he feels theifM®
be strong support in Concjing p
MRS. JUDY BASCO
where the drive is being ledi)
Texas delegation.
Mrs. Basco joins Connie Dowling, Pat Scott, Diane
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