Budget and Tax Overview

As we approach the start of a new school year, we are also approaching the end of the 10-11 fiscal year and the start of the 11-12 fiscal year. Below is a summary of the things that will be happening in the coming weeks with regards to our 10-11 budget and our 11-12 budget and tax rate:

  • The EISD Board of Trustees proposed an overall tax rate of $1.2763 during their regular meeting in July. This proposed rate is necessary in order for the district to do the required publications. The proposed rate is made up of an M & O rate of $1.04 and an I & S rate of $0.2363.
  • The district receives the certified values from the appraisal districts for the upcoming school year. See previous post for details on these values.
  • EISD will receive information from our appraisal districts that will allow us to calculate our effective tax rate and our rollback tax rates. We have received the necessary information from Van Zandt County and are awaiting the information from Henderson County.
  • With the effective tax rate and rollback tax rate calculations, EISD will publish a notice in the local papers that detail the proposed tax rate, revenue generated per student, a comparison of values between the upcoming year and the previous year, the effects of the proposed tax rate on the average value of a home in the district, along with other information. This notice must be published at least 10 days prior to the budget hearing held by the board.
  • The EISD Board of Trustees will hold a public hearing to discuss the proposed tax rate and proposed budget. At this time, we are planning our public hearing to take place prior to the regular board meeting on August 16. The public hearing will start at 7:00 PM.
  • The EISD Board of Trustees will officially approve a budget for the 11-12 school year and then officially adopt a tax rate for the 11-12 school year.
  • At the end of August, the EISD Board of Trustees will hold a called meeting to approve the final amendments for the 10-11 budget.
  • The 10-11 budget ends on August 31, 2011. The 11-12 budget starts on September 1, 2011.

2011 Certified Tax Values

Yesterday, we received the 2011 certified tax values from the Henderson County Appraisal District. These values, together with those from Van Zandt County, make up our total certified taxable value for the 2011 tax year. Below is a chart that summarizes these values:

Actual Values Used for 10-11 School Year
     

Total Taxable Values

HCAD

$478,779,912

  Total

$515,071,950

Capitol

$33,470,290

  Frozen

$70,546,952

Total

$512,250,202

  Total Taxable

$444,524,998

Frozen Value

$70,126,856

  Total Ceiling

$468,982

Taxable

$442,123,346

     
Frozen Ceiling

$466,186

     
         
VZCAD

$2,613,868

  Tax Rate

1.04

Industrial

$207,880

  % Collected

0.98

Total

$2,821,748

     
Frozen

$420,096

  Taxable

$4,530,599

Taxable

$2,401,652

  Frozen

$459,602

Frozen Ceiling

$2,796

  Total

$4,990,201

         
         
Actual Values For 11-12 School Year Received 7-25-11
     

Total Taxable Values

HCAD

$492,749,216

  Total

$514,348,858

Capitol

$18,789,327

  Frozen

$73,619,128

Total

$511,538,543

  Total Taxable

$440,729,730

Frozen Value

$73,156,136

  Total Ceiling

$506,634

Taxable

$438,382,407

     
Frozen Ceiling

$502,445

     
         
VZCAD

$2,599,346

  Tax Rate

1.04

Industrial

$210,969

  % Collected

0.98

Total

$2,810,315

     
Frozen

$462,992

  Taxable

$4,491,917

Taxable

$2,347,323

  Frozen

$496,501

Frozen Ceiling

$4,189

  Total

$4,988,419

 

For the first time in at least 11 years, our total certified taxable values actually decreased from the prior year. The main reason for this decrease can be found in the Capitol area of the Henderson County values. This category dropped from over $33,000,000 in 2010 to around $19,000,000 in 2011. The capitol category includes such things as industry and minerals. This decrease, coupled with a slight increase in our Frozen Values, pushed the 2011 values slightly lower than the 2010 values.

Impact on Funding

In the bottom right hand corner of both tables are the estimated taxes generated for maintenance and operations of EISD. For the 2010-2011 school year, we have estimated that the district will collect about $4,990,000 in taxes. For the 2011-2012 school year, assuming that our M & O tax rate remains at the proposed $1.04, we will again collect about $4,990,000 in taxes. Overall, we will not generate any additional revenue from taxes in the 2011-2012 school year. In turn, this will keep the district from generating any additional state money through Tier II.

09-10 FIRST Results

Below is a copy of the preliminary results of our Financial Integrity Rating System of Texas (FIRST) results for the 09-10 school year. I am pleased to report that once again EISD has achieved the rating of “Superior Achievement”. The FIRST system is designed to give school districts and the public an overview of how the district is doing with regards to finances.

As you can see, some of the indicators are yes/no and other indicators are rated on 5 point scale. A perfect score would be a total of 80. For the 09-10 school year EISD received 78 points. You can click on an indicator for more information.

In the coming months, EISD will hold a public hearing to discuss the financial situation of the district. The FIRST results will be a part of that hearing.

 

Financial Integrity Rating System of Texas

2009-2010 District Status Detail

Name: EUSTACE ISD(107905) Publication Level 1: 6/17/2011 9:03:31 AM
Status: Passed Publication Level 2: None
Rating: Superior Achievement Last Updated: 6/17/2011 9:03:31 AM
Indicators Answered YES: 21 Indicators Answered NO: 1
District Score: 78 Passing Score: 56

 

# Indicator Description Updated Score
1 Was The Total Fund Balance Less Reserved Fund Balance Greater Than Zero In The General Fund? 4/25/2011 7:50:22 PM Yes
2 Was the Total Unrestricted Net Asset Balance (Net of Accretion of Interest on Capital Appreciation Bonds) In the Governmental Activities Column in the Statement of Net Assets Greater than Zero? (If the District’s 5 Year % Change in Students was 10% more) 4/25/2011 7:50:22 PM Yes
3 Were There No Disclosures In The Annual Financial Report And/Or Other Sources Of Information Concerning Default On Bonded Indebtedness Obligations? 4/25/2011 7:50:23 PM Yes
4 Was The Annual Financial Report Filed Within One Month After November 27th or January 28th Deadline Depending Upon The District’s Fiscal Year End Date (June 30th or August 31st)? 4/29/2011 3:43:55 PM Yes
5 Was There An Unqualified Opinion in Annual Financial Report? 4/25/2011 7:50:23 PM Yes
6 Did The Annual Financial Report Not Disclose Any Instance(s) Of Material Weaknesses In Internal Controls? 4/25/2011 7:50:23 PM Yes
      1 Multiplier Sum
7 Did the Districts Academic Rating Exceed Academically Unacceptable? 4/25/2011 7:50:23 PM 5
8 Was The Three-Year Average Percent Of Total Tax Collections (Including Delinquent) Greater Than 98%? 4/25/2011 7:50:23 PM 5
9 Did The Comparison Of PEIMS Data To Like Information In Annual Financial Report Result In An Aggregate Variance Of Less Than 3 Percent Of Expenditures Per Fund Type (Data Quality Measure)? 5/10/2011 10:02:45 PM 5
10 Were Debt Related Expenditures (Net Of IFA And/Or EDA Allotment) < $350.00 Per Student? (If The District’s Five-Year Percent Change In Students = Or > 7%, Or If Property Taxes Collected Per Penny Of Tax Effort > $200,000 Per Student) 4/25/2011 7:50:24 PM 3
11 Was There No Disclosure In The Annual Audit Report Of Material Noncompliance? 4/25/2011 7:50:24 PM 5
12 Did The District Have Full Accreditation Status In Relation To Financial Management Practices? (e.g. No Conservator Or Monitor Assigned) 4/25/2011 7:50:24 PM 5
13 Was The Aggregate Of Budgeted Expenditures And Other Uses Less Than The Aggregate Of Total Revenues, Other Resources and Fund Balance In General Fund? 4/25/2011 7:50:25 PM 5
14 If The District’s Aggregate Fund Balance In The General Fund And Capital Projects Fund Was Less Than Zero, Were Construction Projects Adequately Financed? (To Avoid Creating Or Adding To The Fund Balance Deficit Situation) 5/10/2011 4:06:27 PM 5
15 Was The Ratio Of Cash And Investments To Deferred Revenues (Excluding Amount Equal To Net Delinquent Taxes Receivable) In The General Fund Greater Than Or Equal To 1:1? (If Deferred Revenues Are Less Than Net Delinquent Taxes Receivable) 4/25/2011 7:50:25 PM 5
16 Was The Administrative Cost Ratio Less Than The Threshold Ratio? 4/25/2011 7:50:25 PM 5
17 Was The Ratio Of Students To Teachers Within the Ranges Shown Below According To District Size? 4/25/2011 7:50:25 PM 5
18 Was The Ratio Of Students To Total Staff Within the Ranges Shown Below According To District Size? 4/25/2011 7:50:26 PM 5
19 Was The Total Fund Balance In The General Fund More Than 50% And Less Than 150% Of Optimum According To The Fund Balance And Cash Flow Calculation Worksheet In The Annual Financial Report? 4/25/2011 7:50:26 PM 5
20 Was The Decrease In Undesignated Unreserved Fund Balance < 20% Over Two Fiscal Years?(If 1.5 Times Optimum Fund Balance < Total Fund Balance In General Fund Or If Total Revenues > Operating Expenditures In The General Fund,Then District Receives 5 Points) 4/25/2011 7:50:26 PM 5
21 Was The Aggregate Total Of Cash And Investments In The General Fund More Than $0? 4/25/2011 7:50:26 PM 5
22 Were Investment Earnings In All Funds (Excluding Debt Service Fund and Capital Projects Fund) More Than $20 Per Student? 4/25/2011 7:50:27 PM 5
      78 Weighted Sum
      1 Multiplier Sum
      78 Score

Determination Of Rating

A. Did The District Answer ‘No‘ To Indicators 1, 2, 3 Or 4? OR Did The District Answer ‘No‘ To Both 5 and 6? If So, The District’s Rating Is Substandard Achievement.
B. Determine Rating By Applicable Range For summation of the indicator scores (Indicators 7-22)
Superior Achievement 72-80 and Yes to indicator 7
Above Standard Achievement 64-71 or >= 72 and No to indicator 7
Standard Achievement 56-63
Substandard Achievement <56 or No to one default indicator

Indicator 17 & 18 Ratios

Indicator 17 Ranges for Ratios   Indicator 18 Ranges for Ratios
District Size – Number of Students Between Low High District Size – Number of Students Between Low High
< 500 7 22 < 500 5 14
500-999 10 22 500-999 5.8 14
1000-4999 11.5 22 1000-4999 6.3 14
5000-9999 13 22 5000-9999 6.8 14
=> 10000 13.5 22 => 10000 7.0 14

Budget Summary

As we start getting closer to the start of the 2011-2012 school year, we are also getting closer to adopting a budget and a tax rate. In the budget and tax process, there are many requirements that school districts must follow. One of these requirements is that a budget summary be posted on the district’s website. Below is the summary that can be accessed through a link from our homepage. The summary shows the proposed 11-12 budget compared with the actual expenditures from the 10-11 school year. Of course, technically, the 10-11 fiscal year will not end until the last day of August. So, we have taken current expenditures through July and estimated the expenditures for August.

As shown in the table, the 11-12 budget will be about $200,000 less than the actual expenditures in 10-11. The enrollment figures are estimates. The enrollment figures are used in the calculations for the Per Student Amounts. As you can see, the “Other” category shows a large decrease from last year. This is due to the district no longer being a part of the Henderson County Shared Services Arrangement (HCSSA). This was our special education co-op. Since EISD will be providing all the special education services this year, the payment to HCSSA is no longer required. Note that there are increases in the “Instruction” amount and the “Instructional Support” amount. These increases are due to EISD employing special education personnel to meet all the needs of our students.

EISD is currently planning on having the budget hearing prior to the next regular board meeting. That meeting will take place on August 16. There are certain publications that must be done and those publications are dependent on the appraisal districts getting school districts the necessary information on property values. If EISD cannot publish these materials at least 10 days prior to the 16th, then the budget hearing will have to be moved to a later date. As always, if you have any questions, please do not hesitate to contact me at cholcombe@eustaceisd.net.

 

Budget Summary 11-12 Proposed Budget

   

Enrollment

1460

Category

Amount

Per Student Amount

Instruction

$6,197,281

$4,245

Instructional Support

$1,842,610

$1,262

Central Administration

$439,975

$301

District Operations

$1,653,793

$1,133

Debt Service

$0

$0

Other

$121,000

$83

 

$10,254,658

   

10-11 Estimated Expenditures

   

Enrollment

1455

Category

Amount

Per Student Amount

Instruction

$6,118,198

$4,191

Instructional Support

$1,640,117

$1,123

Central Administration

$459,445

$315

District Operations

$1,730,145

$1,185

Debt Service

$0

$0

Other

$497,752

$341

 

$10,445,657

   

Board Meeting

Last night, the EISD Board of Trustees met in regular session. The meeting started at 7:00 PM and was held in the HS library. Action items included:

  • Approved minutes of previous meeting.
  • Approved the financial reports for June as presented.
  • Approved the Student Code of Conduct for the 11-12 school and reviewed the Student Handbook for the 11-12 school year.
  • Approved Policy Update 90.
  • Approved a proposed tax rate of $1.2763. The tax rate has an M & O component of $1.04 and an I & S rate of $.2363.
  • Approved the memorandum of understanding between EISD and TCU for a college adviser for the 11-12 school year.
  • Approved the sale of propery as presented.
  • Accepted the resignation of Phillip Smith.
  • Employed Zach Underwood as a teacher/coach at the HS for the 11-12 school year.
  • Adjourned

 

 

Board Meeting Tonight

Tonight, the EISD Board of Trustees will meet in regular session starting at 7:00 PM. The meeting will be held in the HS library. Everyone is invited and encouraged to attend. Below is a summary of the agenda items:

 Reports

  • Financial Reports
  • 2011 Local Education Agency Determinations
  • 09-10 Dropout Data
  • Van Zandt County Appraisal District Operating Budget – 2012
  • Preliminary FIRST Rating
  • Attendance Comparison
  • Renewal Costs for Liability, Property, and Vehicle Insurance for 2011-2012
  • School Health Advisory Committee Annual Report

 

Possible Action Items

  • Review District Finance Data for Upcoming Years
  • Consider Baseball/Softball Renovations
  • Consider Code of Conduct for 2011-2012 and Review Student Handbook for 2011-2012.
  • Policy Update 90
  • Proposed Tax Rate for 2011-2012
  • Memorandum of Understanding Between EISD and Texas Christian University for College Adviser for 2011-2012 School Year.
  • Consider Sale of Property
  • Review Employee Handbook
  • Closed Meeting – Personnel and Staffing & Student Transfers
  • Consider Action on Closed Meeting Items
  • Adjourn

 

UIL Update

I closed my last post by talking about how soon we would be starting practice sessions for  football, volleyball, cross country, and band. One of the sessions that I attended at the Summer Conference focused on UIL issues. The conference was conducted by Dr. Mark Cousins. Below is a summary of the session:

  • Rule Changes
    • Football – allow scrimmages after six days of contact, rather than seven
    • Baseball & Softball – allow three games to be substituted in place of a tournament
    • Band – allowing for a brief band director’s study period for the sight-reading contest.
  • Officials
    • Litigation with the sports officials organization continues
    • Possibility of 2011-12 school year being conducted under 09-10 rules for officials
  • Reclassification and Realignment
    • Reclassification and realignment will take place this year. Numbers submitted in October and announcements made in February.
    • This will be the first year that information is submitted electronically.
    • All districts will have their information stored in a database that will be accessible by the public.
    • Districts will have the opportunity to review information that was submitted.
    • The split division will likely continue in 2A.
    • 1A-3A will continue with 3 teams to the playoffs.
    • The realignment process will start at the 5A level. There can only be 245 teams in 5A. Once this is established other divisions will done.
  • Legislature
    • Appears that steroid testing will continue for another 2 years.
    • Concussions – any student even suspected of a concussion like injury will not be allowed to participate until cleared.
    • Applies to every UIL activity.
    • All football helmets will have to be individually inventoried so that districts can keep track of age and reconditioning.
    • UIL is working on an implementation guide for the new concussion guidelines.

 

 

 

School Funding – What can Local Districts Do?

One of the sessions at this year’s Summer Conference was focused on things that school districts could do to improve their financial situation over the next two years. Dr. Doug Karr, school finance specialist did the presentation. His focus was on three aspects within the district: students, property values, and tax effort.

Even with the cut in funding from the state, districts will still earn money based on student counts. In this sense, school funding is simple: the more students you have, the more money you will earn. As we have discussed many times, certain students in certain programs generate more funding for school districts. For example, the number of students that qualify for free/reduced meals determines the amount of state compensatory funds a district receives. For the 2011-2012 school year, the amount will be based on the average of the six highest months of the previous year starting in October 2010 and going through September 2011. As a district, we have about 70% qualify for free/reduced meals. However, the percentages are not distributed evenly throughout the district. At Primary, we have 79.9% qualify for free/reduced meals. That percentage decreases to 73.6% at the Intermediate, 67.4% at the Middle School, and 58.1% at the High School. So, one of the simplest and easiest ways to increase our state funding is to make sure that all the students that qualify for free/reduced lunches are included in the program. To apply for this program, parents need to fill out the application that is sent home at the beginning of the school year.

One other student area that generates additional state funding is career and technology (CATE) classes. These are classes such as business classes, technology classes, and agricultural science classes. Statewide, we have seen a decrease in the number of students enrolling in these classes. This decrease is mainly associated with the increase in the academic requirements for students (the four by four program – four years of science, math, English, and social studies). To offset this increase in core academic classes, EHS has increased the number of periods offered in a day to nine (actually 8 classes and a tutorial period). We have been offering nine periods for the past few years. By increasing the number of periods in a day, we have allowed students to get in all of their academic courses, while also allowing them additional periods to pursue other interests (such as CATE courses). This nine period day has helped stabilize the number of students participating in CATE courses. However, we certainly have room for more students. If you are interested in CATE courses, or just want more information, please contact Phyllis Bice, HS counselor at pbice@eustaceisd.net, or Gwen Orr, HS academic advisor at gorr@eustaceisd.net. Teachers involved in the CATE courses include our agricultural science teachers Zach Tappan ztappan@eustaceisd.net and Theresa Tindel ttindel@eustaceisd.net ; our business teacher, Dee Dee Lancaster dlancaster@eustaceisd.net ; and, our technology teacher, Kathleen Krumm kkrumm@eustaceisd.net. They would be happy to talk to you about their programs and to answer any questions that you might have.

Property values will still play an important role in school funding. Over the last several years, EISD has appealed its property values (in order to get the value lowered) several times. Each time we have appealed, we have been successful in getting property values lowered. We will continue to monitor this area carefully.

The majority of local funds generated by a school district come from property taxes. Recall that a school district has two components involved in a property tax: the Maintenance and Operations ( M & O) portion , and, if the district has voter approved bonds, an Interest and Sinking (I & S) portion. Together, these two components make up the overall tax rate for the district. Several years ago, the state sought to lower property taxes and had districts compress their property tax rates. Prior to this compression, school districts could go up to $1.50 on the M & O portion of the rate. Now, most districts in the state are capped at $1.04. Districts may choose to pursue a tax rate election in which an additional $0.13 may be added to the M & O side if approved by the voters of the district. Currently, EISD has an M & O rate of $1.04 and an I & S rate of $0.2363, for a total tax rate of $1.2763. We have maintained the $1.04 M & O rate for several years. The I & S rate has varied slightly during those same years. EISD still maintains an optional homestead exemption of 20%. This reduction is in addition to the state mandated $15,000 homestead exemption. Of course, in his presentation, Dr. Karr suggested examining and modifying if necessary, the optional homestead exemption as a way to increase local revenue. In an attempt to get more property back on the tax rolls, the EISD Board of Trustees recently approved a plan to sell property in the Indian Harbor subdivision at a flat rate of $100 per lot. This sale has been successful and the district has sold well over half of the lots that are “owned” by EISD. We are hoping to extend this type of property sale to other subdivisions this coming school year.

We will continue to talk about school finance and other topics throughout the rest of the summer, which, by the way, is going by very fast! In 17 days, football, volleyball, cross-country, and band all start their official practices for the 2011-2012 school year!

School Finance – Impact on 2011-2012 Budget

As discussed in my previous post, EISD will lose about $580,000 in state aid for the 2011-2012 school year. As the 2011-2012 budget is prepared, we are using the student numbers at the end of the 10-11 school year to make our estimates. Under our previous state funding laws, EISD would receive about $5,044,000 in state funding for the 11-12 school year (again, this would be using the student numbers at the end of the 10-11 school year). Using these same numbers under the current funding laws, EISD will receive about $4,456,000 in state funding. This is a difference of $588,000.

We are estimating that EISD will serve approximately the same number of students during the 11-12 school year, but we will receive approximately $580,000 less in state funding to serve these students. It needs to be noted that school districts across Texas will receive additional federal funds from the Jobs Grant funding. EISD will receive about $266,000 from the Jobs Grant for the 11-12 school year. This will reduce the funding cuts to $314,000 for the 11-12 school year. It also needs to be noted that the Jobs Grant is only available for the 11-12 school year. We will not receive these funds in 12-13.

How is EISD going to make up for the funds cut by the state? Below is a summary list of the actions that EISD will take to make up for the funding cuts:

  • Reduction in staff by not replacing all personnel that leave or retire.
  • Reduction in benefits offered to employees.
  • Reduction in the local stipend for teachers.
  • No raises for auxiliary or administrative staff.
  • Elimination of certain programs (such as Spring Board Math, Reasoning Mind Math).
  • Decrease in supplies in all departments and at all campuses.
  • Drastic decrease in the amount of money budgeted for substitutes.
  • Decrease in central administration costs.

 

At this time, by utilizing the reductions listed above, it appears that no further reduction in personnel will be necessary. However, as is always the case, much will depend on student enrollment for 11-12. If we have fewer students in 11-12, we will earn less state aid. We can absorb the loss of a few students: we cannot absorb the loss of a significant number of students and still keep the same budget. In my next post, we will be looking at ways that school districts can maximize the amount of funding that they receive from the state.

 

 

 

Update on State Funding

I recently attended the TASA Summer Conference in Austin. While there, I had the opportunity to hear several different speakers discuss the current financial situation and the future financial situation of the state. Most of the discussion centered on education funding. Below is a summary list of the most important points made at the conference:

  • It is estimated that when the legislature convenes again in 2013, they will be facing an $11 billion deficit from the current biennium. That does not include any deficit from reduced state revenues.
  • The current state budget provides $2 billion less in the Foundation School Program in each year of the biennium.
  • The decline in funding will be reflected in adjustments to target revenue, to school finance formulas, and proration.
  • During the first year, school districts will see a reduction in weighted average daily attendance (WADA).
  • During the second year, there will also be an adjustment to target revenues.
  • The business franchise tax is producing between $4 and $6 billion less than projected. If this does not change, the revenue problem in Texas will not go away.
  • The 12-13 cuts will be much larger than the 11-12 cuts.
  • There is concern that if proration is necessary in the second year of the current biennium, that there will not be enough funds available in the next biennium to make up for the proration.
  • There is no indication that the next biennium is going to be any better.

The first funding template for the 11-12 and 12-13 school years has been released. These templates allow local school districts to plug in their projected numbers and estimate the amount of state revenue that these numbers will produce. Using our average numbers from the 10-11 school year and estimates on tax revenue, the template is projecting that EISD will lose about $588,000 in funding for the 11-12 school year and EISD will lose about $770,000 in funding for the 12-13 school year. Over the next few days, we will look at the impact that this reduction in state funding will have on our budget. As always, if you have any questions regarding anything about school finance, please do not hesitate to contact me at cholcombe@eustaceisd.net.