The board also approved a $57 million budget for fiscal year 2024-25 with a $1.29 million shortfall and a total tax rate of $1.2869, according to documents. The tax rate is based on a $.077 increase in the maintenance and operations tax rate contingent upon the VATRE passing this election, but the budget does not include the $2.5 million in revenue that it would generate.
“This tax rate increase is being recommended because of the way the school finance formula is set and because of the inaction of our state legislature to fully fund public schools,” Chief Financial Officer Liz Stewart said.
As a result of the lack of state funding, AISD has adopted deficit budgets for both the 2023-2024 and 2024-2025 school years, Stewart said. This shortfall is partly because the basic allotment per student has remained unchanged since 2019, while inflation has increased, reducing the ability to support teachers and staff effectively, she added.
The context
The district last increased its M&O rate in 2012. Since the 2020-2021 school year, the M&O rate has remained the same or decreased, according to documents. This proposed $0.077 increase is the most the tax rate could be compressed for the district.
The M&O rate funds school district operations, instruction, staff, transportation, maintenance, and daily operating expenses. In contrast, the interest and sinking fund, representing the other part of the district’s annual budget, is financed through bonds. Bond funds from the I&S budget cannot be used for operational costs such as teacher raises, rising utilities, increasing insurance costs, or other day-to-day expenses, according to documents.
The details
The M&O tax rate in FY 2023-24 was $0.7122. Without the VATRE, it would be $0.7099 in FY 2024-25. If AISD residents pass the VATRE, the M&O tax rate would be $0.7869, resulting in an annual $77 increase for every $100,000 of taxable home value, according to district documents.
However, even without the VATRE, residents could still see an increase on their tax bill due to an increase in property values from 2023. Taxable property value in the district increased by $700 million since last year and officials anticipate collecting around $38.4 million in FY 2024-25 compared to $34.4 million in 2023, according to documents.
Property owners 65 and older with a homestead tax exemption would experience no change to their taxes as a result of the election.
More details
If approved, AISD would allocate the $2.5 million in VATRE revenue toward staff raises, Stewart said.
In June, the district approved a one-time payment of $1,000 for teaching staff, $500 for paraprofessionals and auxiliary staff, and a $50-per-month increase to health insurance contributions at a total cost of $890,000. But due to a lack of funding, the district will dip into its fund balance—a district’s savings account—to cover the cost savings. This prompted the board to consider calling the VATRE.
The VATRE revenue would allow AISD to replenish its fund balance, which state law requires must be enough to cover two months of operating expenses. The FY 2024-25 budget has a fund balance that covers 2.4 months, Stewart said. During the June meeting, the board also approved a 2% midpoint raise for teachers contingent upon passing the VATRE. The raise will occur in the middle of the 2024-25 school year and cost around $885,000.
Additionally, $400,000 will help offset the budget shortfall and $325,000 will help maintain classroom ratios and fund future pay increases, according to documents.
Part of the VATRE process included conducting an efficiency audit. The board approved Hankins Eastup Deaton Tonn Seay & Scarborough, LLC as the auditing firm in June, but they have not yet reviewed the results.
Going forward
The one-time payment is already approved since it uses fund balance and was built into the FY 2024-25 budget. However, without funds from the VATRE, the district will be unable to afford the 2% midpoint raise. Due to this, the expense was not included and will need to be amended into the budget if the VATRE passes, Stewart said.
Early voting will be held from Oct. 21 to Nov. 1, with Election Day on Nov. 5. The deadline to register to vote is Oct. 5. The AISD VATRE will be on ballots for all voters living in the district.
District officials will share presentations with staff and the community. A schedule of presentations for families and community members will be provided soon. Additional details will be available on the district website, according to a district news release.
