Transcript Slide 1
Dan Casey
General Structure of HB 1 Tax Relief
Program Adopted in 2006
Compression of 2005 M&O rate is the major vehicle
2006-07: 88.67% ($1.33 for most districts)
2007-08: 66.67% ($1.00 for most districts)
2008-09 and thereafter: Compression percentage
determined by Commissioner of Education based on
appropriations made to Property Tax Relief Fund
Additional four-cent M&O rate increase permitted by
school board action (most adopted this rate for 2006)
I&S tax rates not affected by HB 1 program
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M&O Rates Going into 2007-08
In 2006-07, 529 districts adopted tax rates that
were at or above $1.37
All of these districts will face rollback elections
if they want to adopt a rate in future years that is
greater than their compressed rate plus 4 cents
Another 173 districts were within 4 cents of
$1.37 last year and are likely to hit the $1.04
barrier in the near future (given the additional
compression taking place this year)
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Rollback Provisions for ISDs
Districts may seek a rollback election up to $1.17 M&O rate
for most districts
116 districts have called rollback elections for fall 2007
Most on November ballot
Several earlier election dates due to early delivery of
certified tax roll
Approved by voters to date: Maud, Redwater, Crowell,
Whitesboro and Ysleta
Rejected by voters: Schulenburg
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Rollback Provisions, cont’d.
We emphasize to districts that this is a
rollback election, not an authorization
election
Districts cannot get permission to tax above
a certain rate and maintain that permission
for future years without levying the tax
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Districts Holding Rollback Elections
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Traits of Rollback-Election Districts
• Generally small districts in enrollment
• Other factors:
• Little value or enrollment growth
• Low target revenue per WADA—about
$300 per student less than state average
of $4,919
• 2005-06 target revenue year for most
• Indicates that financial need is a major
factor in adopting the higher rate and
calling the election
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Rollback Elections: Chairman Eissler
“Really what we’re seeing with that is a new
way of raising money in school districts that
is in partnership with the taxpayers. The
state buys down the rate, and if the school
district feels that their hold harmless or
their growth money isn’t sufficient, then
they raise the tax rate.”
-Quorum Report
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Public Education Spending
“In the absence of funding for property tax
relief, funding for the (Foundation School
Program) is lower than in the 2006-07
biennium due to strong growth in local
school district property values, which results
in reduced state obligations.”
Source: Legislative Budget Board, Summary of Conference
Committee Report for House Bill 1
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General Characteristics of the Funding System
Funding increase primarily available through
tax rate increases
Exceptions based on specific state
programs or increases in super penny
yields
Increases in property values result in lower
state funding with one-year exceptions for
tax effort above compressed rate
Enrollment growth funded
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Funding Basics for 2007-08
Funding levels depend on 2006-07
final target revenue
Best of 2005-06 or 2006-07 under old
school finance law at $1.50 rate
Third alternative is based on effective
tax rate calculation
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Basics, cont’d.
• Revenue levels associated with tax
rates
• Target revenue for compressed rate
• First 4 cents of optional rate @
$46.94 per penny per student
• Remainder of optional rate and
rollback rate @ $31.95
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Funding Increases for 2007-08
Increased yield for four super pennies
(from $41 to $47)
$23.63 per WADA for salary increase
These two items represent
approximately a 1% increase in revenue
per student
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Our System? (2007-08 school year)
Revenue Target: $28.997 billion
Tier I (state): $7.245 billion
Tier II (state): $1.038 billion
Other (state): $927 million
Local taxes @ compressed rate: $14.330 billion
Recapture: $973 million
Hold Harmless: $6.431 billion
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Partners
Lynn M. Moak
Daniel T. Casey
Associates
Joe Wisnoski
Amanda Brownson, Ph.D.
Bob Popinski
Consultants
Kathy Mathias
Larry Groppel
Thomas Alvis
Research Analyst
Maritza Kelley
Administrative Staff
Kari Ruehman
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Susan Moak
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