District administration and the board of trustees discussed a possible tax ratification election, or TRE, at the May 13 board meeting. Through such an election, voters would have the chance to decide whether to raise the tax rate.
What does this mean?
A TRE was recommended by FBISD to generate more property tax revenue for the district in anticipation of less public education funding from the state during the 2019-20 fiscal year.
How does this affect FBISD?
Steven Bassett, the district's chief financial officer, presented factors driving the need for a TRE, including covering the mandatory teacher raises included in the Texas Legislature’s House Bill 3 as well as being able to make continued investments in recruiting and retaining teachers and quality of instruction.
The district is also facing the elimination of the Cost of Education Index, which is an adjustment made to school districts to account for regional variations in the price of goods and services beyond the control of school districts. Bassett said this will be a $56 million loss for the district.
To fund schools, the legislature is also discussing reductions in recapture—which takes excess funding from wealthier school districts and redistributes it to poorer districts and charters—and an increase in weights for poverty. Bassett said FBISD is not in recapture nor does it have as high a poverty level as other ISDs, so neither of those funding increases would benefit the district.
HB 3 also includes mandatory prekindergarten, which would put a $7.6 million funding gap in the district's budget, Bassett said.
A lack of funding would prohibit FBISD from funding certain goals and objectives, he said. Those include special education identification, which has increased by 64% between the 2016-17 and 2018-19 school years; Tier 3 behavior and trauma informed care for classroom management; equitable access to curriculum that includes instructional coach expansion district-wide over two years; and Gifted & Talented support expansion.
What would a TRE look like for taxpayers?
The average home value for those paying FBISD taxes in 2019 is estimated to be $261,013, according to the presentation. Without a TRE, the district’s maintenance and operations tax rate is $1.06, and the interest and sinking tax rate—funds for payments on the debt that finances a district's facilities—is $0.28 for a total rate of $1.34.
With the TRE, the district would add $0.11 to the M&O tax rate to be $1.17 to bring the total tax rate up to $1.45. The estimated increase to taxpayers on an annual basis would be $287.
“We don’t have to take all 11 pennies, but it gives us flexibility,” Bassett said. “We would need an amendment to House Bill 3 to do a TRE this year. One thing we want to make sure is if we do $1.17, then we want the flexibility not to take all of the 11 pennies at one time through an election, but an amendment will be needed.”
How would a TRE affect FBISD’s budget?
The district’s three-year budget outlook with no TRE would put it in a $48.5 million deficit by the 2022-23 school year, according to the presentation. With the TRE, the district would be able to fund its goals without a deficit during the same time period.
The district’s proposed budget without the TRE is estimated at $691.4 million, and $724.3 million with the TRE. The bulk of the budget expenditures, about 63%, goes toward funding instruction and paying staff.
Are there any alternatives?
In addition to maintaining the existing tax rate, Bassett said if the TRE is approved by voters, the district may consider not taking the whole amount. For example, if the district took half, or $0.055, for a rate of $1.40, the estimated increase to taxpayers on an annual basis would be $144.
However, he cautioned that without the TRE the district would have to reevaluate classroom ratios and possibly dismantling some existing programs to ensure adequate funding after the 2019-20 school year.
How certain is a TRE?
Final legislation will likely include compression of the tax rate, property value caps or an increase of homestead exemptions, Bassett said. Therefore, the ability or need for a TRE depends on final bill language, funding expected from the state and final mandatory salary requirements for teachers, Bassett told the board.
“We think calling the TRE would ensure us flexibility going forward,” Bassett said. “It is our hope that we would have the ability to stair-step into that final number rather than taking the whole 11 cents. In the future, if we do put ourselves in a situation with loss of state revenue, we do think we would be able to handle that.”
How can taxpayers get involved?
FBISD set the date of June 3 to conduct a public budget meeting for the proposed 2019-20 school district budget and tax rates. The meeting will begin at 5:30 p.m. in the board room of the FBISD Administration Building at 16431 Lexington Blvd., Sugar Land.
