San Marcos CISD Trustees President Judy Allen, left, and Superintendent Patty Shafer, right, discuss tax policy at Monday’s school board meeting. Photo by Sean Batura.
By SEAN BATURA
Faced with an operating deficit and a debt fund surplus, San Marcos CISD trustees might consider a rollback election to re-allocate a small portion of its tax collections.
Financial projections presented to trustees Monday showed district operating budget deficits next fiscal year ranging from $407,392 to $1,566,743.
Trustees discussed calling a rollback election to give voters the option of using two cents of the district’s property tax rate to generate revenue instead of paying off debt. Doing so would result in about $1 million more in operating revenues for next year, said San Marcos CISD Assistant Superintendent for Business and Support Services Michael Abild.
The required interest and sinking (I&S) rate for 2010-2011 is expected to be 31 cents per $100 of taxable valuation. The district’s current I&S rate is 33 cents per $100. If property values increase past a certain point, the required debt service rate could be less than 31 cents per $100. Abild did not project any growth in taxable property values for next year.
Debt service expenditures for 2009-2010 were budgeted at $10,685,240 with a surplus of $207,865.
The district currently uses $1.04 per $100 to generate revenue for maintenance and operations (M&O), or the general fund. If voters choose move two cents from debt service to the general fund, the district’s total tax rate would remain at its current $1.37 per $100.
“And that, ladies and gentlemen, is why they’re called ‘golden pennies,’ because those pennies are not subject to re-capture, and we would have a nice little increase in state funding, moving from about $21.2 million, which is currently budgeted, to about $21.6 million, roughly, with a $1.06 tax rate,” Abild told trustees.
Trustees can call a rollback election any time they wish, though such an election must be held no sooner than 30 days and no later than 90 days after its announcement.
“If the board is interested in pursuing a strategy like this, (you) would probably want to identify the most strategic — strategically-advantageous date to hold that election,” Abild told trustees. “And that’s something we need to review. Hopefully, it would be before the deadline for approving the budget, which would be August 31, and (it) would probably benefit the district to hold the election shortly after teachers return to the district, (which would be) mid to late August.”
Abild presented three budget projections for next year involving no additional expenditures, no change in state funding formulas and no growth in taxable property values.
“We think we could get some modest growth in our values,” Abild said. “In fact, it’s even likely we’ll get some modest growth. But, as you know, the benefit of property value growth with the current state funding formulas is not as great as it used to be, because typically, as tax collections increase, state funding correspondingly decreases. So a $250 million increase in property values under the current formula would only yield about $100,000 of additional revenue.”
The three projections assume the absence of a 2.5 percent teacher step increase in pay for next year, no increases in personnel positions and no increase in student enrollment. Abild said a 2.5 percent step increase would be equivalent to about a $1,200 raise for each teacher.
“This year our student enrollment officially is 7,434,” Abild said. “Last year it was 7,438. So that’s about as flat as the district can get. And we’re expecting that enrollment will continue to be flat going into next year.”
Abild said the budget projections do not account for funding received this year in the form of a “high cost grant” intended to mitigate the financial effect of special education on the district.
“We think that that grant could potentially relieve the general fund of $400,000-$800,000 of primarily payroll costs for next budget year,” Abild said. “It’s actually relieving the budget of about $400,000 in payroll costs this year, and that was a nice surprise for us.”
One of the three budget projections for next year calls for $56,676,856 in total general fund revenues, which is $50,417 less than this year’s revenues, a reflection of less state funding. The scenario entails the same expenditure amount as this year’s budget — $57,084,248, and includes a deficit of $407,392 compared to this year’s deficit of $356,975.
Another scenario involves the same expenditures and revenues as the previous projection, except for the inclusion of the 2.5 percent teacher step increase. The step increase amounts to $1,159,351 more in general revenue expenditures. The scenario predicts a deficit of $1,566,743.
Whether the district will implement the step increase will depend in a large part on a pending Texas Attorney General opinion regarding last legislative session’s House Bill 3646, which relates to public school finance and programs and amends the Education Code.
According to information published by the Texas Association of School Boards in February, Texas Commissioner of Education Robert Scott filed a request for an opinion with the office of Texas Attorney General Greg Abbott seeking clarification about whether the bill establishes a minimum salary requirement or mandates that all teachers receive additional step increases next year based on their district’s 2008–09 salary schedule. Abild said the AG may issue an opinion in July.
“Education Code, as added by this Act, is not intended to require an increase in the second year of the biennium beginning September 1, 2009,” states House Bill 3646.
Abild said the aforementioned provision seems to make the issue “as clear as clear can be,” though he said there are legal intricacies he is probably not aware of.
A third district budget scenario for next year takes into account a 2.5 percent payroll increase and the two “golden pennies” — an M&O rate increased to $1.06 per $100 — resulting in total general fund revenues of $57,719,193 and expenditures of $58,243,599. The budget deficit would be $524,406. Abild said the school district had $22.8 million in reserves as of Aug. 31, the latest reporting period.
Budgeted general fund expenditures for 2009-2010 were $57,084,248 with a deficit of $356,975. Budgeted general fund expenditures for 2008-2009 were $55,647,254 with no deficit or surplus. Budgeted general fund expenditures for 2007-2008 were $54,076,684 with a deficit of $636,515. Budgeted general fund expenditures for 2006-2007 were $52,523,628 with a surplus of $517,016.
Though San Marcos CISD technically is considered property wealthy under Chapter 41 of the Texas Education Code, none of its revenues are currently subject to recapture by the state. Under Chapter 41, qualifying districts must give the state property tax revenue for redistribution through Foundation School Program.
Abild said the district would not pay “Robin Hood” payments unless its wealth per student calculation increased to about $475,000 per student. However, Abild said if the district’s tax rate exceeded $1.06 per $100, taxes collected beyond $1.06 would be subject to “the $319,500 wealth level.” Abild said the district is now “safely within the protection” of the $475,000 limit.
“It is the result of good fortune and strong fiduciary management that we are not subject to the Robin Hood taxes,” said San Marcos CISD Trustee Peter Baen (District 5) at the meeting.Email | Print