At an April 15 workshop meeting, the Magnolia ISD board of trustees discussed teacher raises and a possible voter-approval tax rate election ballot initiative, known as a VATRE, for the 2024-25 school year.

The overview

MISD officials said they do not expect a shortfall in the district's 2024-25 school year budget, but the board will still need to decide what to do with the $1.25 million in leftover funding it has remaining.

Assistant Superintendent of Operations Erich Morris said MISD is in good financial shape compared to other school districts in the area.

However, the district has an option of having a VATRE for three additional cents in the tax rate via voter approval. According to the Texas Education Agency, the first eight pennies above a district's maximum compressed tax rate are referred to as "golden pennies" because it allows a district to generate higher levels of funding.

"The golden pennies produce ... higher revenue than any of the other pennies," Morris said. "For every golden penny we get, the state pays us $1.2 million."

Morris suggested to the board trying to capture the three golden pennies via approval based on its projected property tax revenue of $76.5 million for the 2024-25 year under its current maintenance and operations, or M&O tax rate of $0.6669 per $100 valuation. The full 2023-24 tax rate was $0.9638 per $100 valuation.

An M&O tax rate of $0.6969 would generate $80.15 million in tax revenue, but it would also bring an additional $3.7 million in state aid. He also presented scenarios for how much several other tax rates would generate.

For a VATRE to be approved, a governing body is required to hold the election on the uniform November election date of the applicable tax year, according to the Texas comptroller’s website.

If the school district holds an election, Morris told the board there would be two budgets developed at the beginning of the school year, one of which would take into account the proposed tax rate if the referendum passes in November.
Plan for the future

Morris told the board during the workshop there is an "available balance of $1.25 million" in the district due to enrollment growth after budget efficiency efforts.

With a balance of $1.25 million, the school district has the option to raise the teacher and staff salary by up to 1%, which would cost $1.1 million, Morris said.

“We know that one of the problems that we have as a district is our pay gap, or teacher pay gap that exists primarily at the higher years of experience around the team,” Morris said. “We know that a gap exists there, and we lose some teachers as well.”

The salary increase would include:
  • 0-5 years of experience: 1%
  • 6-15 years of experience: 1.5%
  • 16-25 years of experience: 2%
  • 26+ years of experience: 3%
In a letter given to staff, Superintendent Todd Stephens said, "One item setting MISD apart from most other districts was the fiscally prudent decision to freeze salaries for the 23-24 school/fiscal year. Given record inflation and the state’s inaction to support public schools, maintaining our balanced budget has proven fiscally wise and prudent."

Another option the school district has is to use the money available for one-time retention payments where $500 would be distributed to all employees and $1,000 would be distributed to teachers, Morris said.

A $500 retention payment for all employees would equal $1.25 million.

"We could consider in addition to either [options] A or B, possibly a utilization of a fund balance for a one-time retention bonus for all employees of a minimum of $500," Morris said.

MISD previously approved a one-time teacher retention stipend of $500 for September, as previously reported. A decision on how to use the $1.25 million was not made at the meeting.

What's next?

The district still has to certify property values and must adopt a budget for FY 2024-25 by Aug. 15.