Why Plano ISD trustees want to be included in the rising property values discussion

Students walk through the halls of Lebanon Trail High School, one of four new schools that Frisco ISD opened this year.

Students walk through the halls of Lebanon Trail High School, one of four new schools that Frisco ISD opened this year.

The Plano City Council and the Plano ISD board of trustees will hold a joint work session tonight in which trustees will provide updates on the district’s enrollment demographics and the new performing arts theater. Both entities will also share its goals for the upcoming legislative session.

The meeting will take place at 6:45 p.m. at the Plano ISD Sockwell Center, 6301 Chapel Hill Blvd., Plano.

The meeting comes nearly a month after PISD trustees testified in Austin and Plano to express their desire for more transparency with regard to school funding. The goal, they said, is to give property owners in Plano a better understanding of how their school tax dollars are being used, PISD trustee Missy Bender said.

PISD and a coalition of other Region 10 leaders have been reaching out to lawmakers to bring school funding to the forefront of the rising property values discussion. Home sale prices in Collin County have nearly doubled in the past decade, and news of rising home values, sale prices and property taxes has reached state legislators, who are trying to determine if state intervention is needed to curb the financial burden on property owners.

Although most property taxes paid by Plano residents—about 69 percent—go to fund schools, those opposed to lowering PISD’s tax rate to offset the increases argue that school districts are generally unable to lower their tax rates because of the state legislature’s over reliance on property taxes to fund education.

With a tax rate of $1.439 per $100 of valuation, PISD has the second-lowest tax rate in Collin County.

“People need to understand that property tax relief and school finance reform are completely intertwined,” PISD Chief Financial Officer Steve Fortenberry said. “You really can’t fully do one without the other. If [school districts] reduce their tax rate [they] simply get less money.”
“If you follow the money you’ll see that the money goes in from recapture and [from] property value growth."—Missy Bender, Plano ISD trustee

Increases in property taxes does not necessarily mean more money for school districts, however, Bender said.

“As a taxing entity, our revenue stream is completely different. None of that increase stays here, it all goes to the state,” she said.

About 25 percent of Texas school districts are subject to paying recapture taxes to the state under Chapter 41 of the Texas Education Code. These 251 school districts include Plano, Frisco, McKinney, Allen and Prosper ISDs and contribute approximately $1.5 billion each year in recaptured property taxes, according to the Texas School Coalition.These payments are used by the state to fund its share of public education.

More districts are expected to join these districts as their property values increase, Bender said, including Houston ISD. Houston will hold a special election Nov. 8 that, if approved, would require the district to begin sending recapture payments to the state to the tune of about $160 million.

Plano ISD paid $60 million in recapture taxes to the state in 2015-16, or 12.7 percent of its operating revenue, according to district data.

“If you follow the money you’ll see that the money goes in from recapture and [from] property value growth,” Bender said. “Other districts that are not subject to recapture are subject to growth so [the state] take[s] their money too. It’s not just [Chapter 41 schools].”

Although the money collected technically goes toward school funding, the more school districts are contributing the less that is being paid for by the state, Bender said. In other words, local property taxes are supplanting the state’s required funding level, she said. Instead, those displaced funds went toward franchise tax relief, Fortenberry said.

“It just keeps ratcheting up,” Fortenberry said. “In the long run, the only way that we get to retain any more money for operations is if we get more students, which we haven’t been, and if we get more students we have more operating cost. If we raise our tax rate we get more revenue, but we can’t—like a lot of [school] districts, we’re at the max.”

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