The decision triggers a tax ratification election, a special election asking voters to approve a tax rate that is above the $1.04 maintenance and operations tax rate allowed by state law. The election is expected to take place Aug. 27.
If approved by voters, the combined tax rate, which is currently $1.46 per $100 of valuation, would increase to $1.59. The increase would mean an extra $37 a month, or $443 a year, on an average home within FISD.
FISD is projected to lose approximately $30 million in state funding because of the state cutting a fund known as the Additional State Aid for Tax Reduction for the 2017-18 school year.
FISD CFO Kimberly Pickens said that the 13-cent increase would help make up for that loss of funding.
The state began cutting from the ASATR fund in 2011, and by the 2017-18 school year FISD will have lost $125 million.
Pickens said FISD has absorbed the loss of funding through lower than average employee raises, lower than average teacher salaries, higher class sizes at every level, reduced spending and keeping a lean central and support staff.
The higher class sizes caused the district to apply for nearly 300 class size waivers during the 2015-16 school year.
The tax rate increase would help the district reduce class sizes, hire staff and provide additional resources to attract and retain high quality staff, Pickens said.
Several residents spoke during the public hearing: some in support of the tax hike and others not.
Those opposed asked the district to consider the average taxpayer as property values in Frisco have gone up. Others asked the school board to wait a year before making a decision or to find other cost-cutting solutions before raising the tax rate.
District officials said the budget process begins in the fall, and they have looked at every option, saying the tax increase is the only way FISD can make up for the loss of state funding.
FISD is the only school district in Collin County that has not increased its tax rate above $1.04.
"When we first began cutting, we tried to stay as far away as possible from the classrooms, but there's only only so much cutting you can do before it begins to affect the classroom," Board President Anne McCausland said.
How the FISD tax rate works
Frisco residents pay a combined rate to FISD that supports two separate funds for different purposes. The maintenance and operations, or M&O, tax rate pays for daily operations. More than 80 percent of the M&O budget goes toward payroll, according to the district.
The interest and sinking, or I&S, tax rate pays off the debt from issuing voter-approved bonds to build new schools, renovate facilities and fund other capitals projects.
According to state law, school districts cannot spend I&S funds for daily operations or to pay teachers and staff.
The 13-cent increase would be applied to the M&O rate, from its current $1.04 to $1.17 per $100 of tax valuation. The I&S tax rate is proposed to remain the same, at 42 cents, for a total combined tax rate of $1.59 per $100 of valuation.
Trustees will vote on the budget for the 2016-17 school year during the June board meeting.
