Published: September 04, 2008 10:27 pm      

Meetings set to discuss HISD rollback election

The Huntsville Independent School District will host two informational meetings concerning the October tax rollback election next week at the Region VI Education Service Center.

The first meeting will be held on Monday, followed by a second meeting on Thursday. Both meetings will commence at 7 p.m., and the public is invited to attend both meetings.

According to HISD Superintendent Richard Montgomery, the meetings are being held in order to provide information concerning the rollback election.

“We feel that there are a set of very important points the public needs to understand about this rollback election, so we have two separate community forums planned for next week,” Montgomery said. “Everyone is welcome, and we will have a question-and-answer period following a presentation on the rollback election.”

During the meetings, basic information about the rollback election including the legal justification for the public’s involvement will be presented.

According to Montgomery, the type of rollback election the district will hold in October may be unfamiliar to the public because it did not require a petition process before being scheduled.

“A school district is required to hold an automatic rollback election, without the petition process, to ratify the current year’s tax rate,” he said. “If the school board adopts a tax rate above the rollback rate of $1.21 per $100 property valuation — which our board did on Aug. 5 — then the district must get voter approval for that rate.

“HISD has proposed a maintenance and operation rate of $1.17 plus a debt service or INS rate of 17 cents, making our total proposed tax rate $1.34. That’s the reason we’re having this election — to get voter approval on the $1.34 tax rate per $100 property valuation.”

One of the biggest contradictions Montgomery will address is why the district must ask for a higher tax rate when the HISD business office has consistently received superior operation ratings.

“Our business office has always received a superior financial accountability rating from the state, but two major financial factors which are out of our control have been weighing heavily on us since 2006,” he said. “First, the state has set a target amount of funding they provide us for each student which has not changed with inflation, and second, the costs of running the district have increased significantly.

“So, while HISD is rated superior with respect to financial accountability, reduced income and increased expenses have created a deficit of over $3 million, and our resources have fallen short.”



Set state funding

To address the first problem — reduced income from the state — Montgomery will refer to what is called a target hold harmless level of funding per weighted average daily attendance.

The level of funding, calculated by the state, sets an amount of money the state will allow the district to take in for each student for each day of school.

The concept of weighted average daily attendance takes into account any additional costs of teaching a particular student, such as their enrollment in special programs — meaning, under the formula, some students may be counted more than once.

“When the state changed the funding formula in 2006, they established what they called a target hold harmless funding amount for each student,” Montgomery said. “That becomes our district funding per student per day of attendance, and that amount is different for each district.

“Those amounts range from $3,500 per student per day to almost $13,000, and we’re at $4,752.”

The set amount of $4,752, Montgomery explained, means the state will make up whatever amount of the $4,752 per student per day that the district does not collect in local taxes.

Altogether, the district will never collect more than $4,752 per student per day when both local tax money and state funding are taken into account.

“Until the law is changed, that $4,752 will not change, so there is no accounting for inflation or for your local tax base,” he said. “That formula is true through the first dollar of our tax rate, meaning whatever we bring in locally for the first dollar of our tax rate, the state can lower their amount, so we always end up with $4,752.

“If we get less, the state kicks in more, but if we take in more tax money, the state fills in with less funding.”



Golden pennies

Last year, in order to help combat rising operation costs, the board approved a $1.04 tax rate, which was four cents higher than the maximum legal tax rate of $1.

“If we are at a $1 tax rate, we are considered by the state to be at the maximum tax effort, but they build more options into the tax rate,” Montgomery said. “The school board can vote to add four pennies to that $1 rate, making the tax rate $1.04. Those extra pennies are called golden pennies because they generate a lot more revenue than that first 100 cents.

“The first 100 pennies generate $37.12 per each penny per student per day, but the additional four pennies each generate $52.17 per penny per student per day because they’re not subject to the state formula.”

To bring the tax rate above $1.04, which the board has proposed this year, voter approval through a general rollback election is necessary.

Since the board proposed a tax rate of $1.17 for the 2008-09 school year — 13 cents above the $1.04 tax rate which only required board approval — voter approval is necessary to pass this year’s budget.

“The additional 13 cents includes two more golden pennies and 11 regular pennies,” Montgomery said. “Basically, the state has said if we really want to maximize our operation, we must get voter approval on that rate.”

According to Montgomery, more than 100 school districts in Texas have called for rollback elections this year, and more are expected to use the option in years to come.

“We already have a budget deficit, and if we don’t get that fixed, it will just snowball in the years to come,” he said. “That’s why it’s time for this particular plan.”



Possible outcomes

With voter approval of the $1.34 tax rate, Montgomery said the district would generate an additional $3,290,734 in taxes during the 2008-09 school year, which would almost exactly account for the year’s budget deficit.

“The $3.3 million we would collect if the higher tax rate was approved would allow us to balance our budget, plus it would allow us to adopt a compensation plan which would provide raises for every employee in the district,” he said.

Without voter approval, Montgomery said the district would be facing extremely undesirable outcomes, including the possibility of reducing the number of teaching positions in the district.

“For this year, if the tax rate doesn’t go through, we will not generate that additional $3.3 million and we’ll be looking for another way to fund that,” he said. “This year, we would have to take that money out of our fund balance, but the question is whether or not we can do that again next year with our expenses going up again.

“At the end of this year, if this does not pass, we’ll have $11.5 million in our fund balance, but if that compounds next year, we could be looking at having half of that after next year. We could potentially end up in pretty deep financial trouble, and we’re looking at trying to solve this now before it becomes something we can’t solve by outside intervention.”

While the district has made successful attempts to trim costs outside of the classroom, Montgomery said some teaching positions may also have to be terminated without the additional funding.

“We would have to start looking at employee positions in the coming years, and it takes 22 teaching positions to equal $1 million,” he said. “If we’re looking for $3 million, that would mean we would have to look at 66 teaching positions.”



Affecting the public

While the 13 cent tax increase may seem like it would make a significant difference for area residents, Montgomery said the difference would cost the average family an additional $10 a month.

“The only way I have to answer how much the average family would pay is to look at the certified values we get from the appraisal district,” Montgomery said. “The average taxable value for a piece of real estate in this school district is $88,933.

“The way you figure out your tax bill is to take that value, in this case $88,933, divide it by 100 and multiply it by the total tax rate. With our tax rate from last year — $1.04 plus a 17 cent INS rate — the total amount of taxes for the average household was $1,076.09.”

If the rollback election passes, the new tax rate would be calculated by considering the taxable value of a piece of property, such as $88,933, dividing it by 100 and multiplying that number by the 1.34.

“If the rollback election passes, the average piece of real estate would be taxed $1,191.71, which is $115.62 more than if we had left everything alone,” Montgomery said. “If we look at what that would cost us monthly, that would cost the average person $9.64 more a month.

“When you get right down to it, people are going to have to ask themselves if it’s worth $9.64 a month more on average to take care of our schools.”

A final point Montgomery will address is the fact that residents who are 65 years of age or older in the district will not be affected by the rollback election even if it is approved.

“Residents in that age bracket have a frozen tax rate, so the only way their taxes would be affected is if their property values go up,” he said. “What we do with the tax rate doesn’t affect their bill at all.”