Legislation may have implications for district revenue
The San Marcos Consolidated Independent School District Board of Trustees heard details concerning the use of Proposition B funds recently awarded to the district via voter approval.
At the regular meeting Monday, the board received a legislative update and a presentation on the impacts that proposed bills from the 2023 Texas legislative session could have on district revenue.
SMCISD Chief of Operations Bernie Sandoval gave a presentation on the use of Prop B funds, the $147,724,645 voter approved bond meant to provide upgrades to all 12 SMCISD campuses.
Sandoval said higher priced items that have already been purchased include $753,378 for school buses, $131,943 for remote control of HVAC for DeZavala Elementary School, $103,559 for courtyard shade for San Marcos High School, $185,485 for auditorium lighting also for the high school, $185,000 for districtwide security cameras, $154,612 for playground and shade for learning areas for DeZavala Elementary School, $135,000 for campuswide telephones for classrooms, $723,000 for district-wide LED lighting and $1,094,013 for the new central office.
The board then received a presentation from Josh Haney, of Moak Casey, an educational consulting firm, regarding the status of the 88th legislative session and the impacts that it could have on the school district.
“Despite a lot of finger pointing and back and forth arguing, not a lot happened, particularly on school finance which is a little disappointing, given the surplus that they had access to unprecedented levels of surpluses,” Haney said. “$33 billion in GR [General Revenue], $27 billion in Rainy Day Fund. A lot of money that could have been put to good use during the regular session is still sitting on the sidelines.”
Haney outlined what did make it onto the budget.
“We’re continuing the current law of compression. This is the compression that was put into place by House Bill 3 in 2019 and tweaked a little bit in HB1525 in 2021. That compression is bringing down your tax compression ceiling statewide and that costs about a billion dollars, so they’re continuing that … that will have implications on the tax rate that you all adopt and the tax rate that goes in your notice,” Haney said.
“We did get an increase in the Golden Pennies, so I think last time I spoke to you all, I talked a little bit about the way that your M&O [Maintenance and Operations] tax rate is structured. There’s a Tier 1 portion and a Tier 2 portion. Within Tier 2 there’s a portion that’s called Golden Pennies. They’re called “golden” because there’s no recapture there. They’re more valuable, you get more state aids for them. They’re increasing the yields and that’s due to current law.
“The yield for those pennies are tied in part to statewide property values, so as everybody’s property values have gone up recently, the yield for those pennies are going up as well.”
Haney said that the yield for golden pennies was $98.56 in fiscal year 2022 and will be $126.21 for the next school year and $129.52 for the year after.
Haney said that the increase in golden pennies is the only substantial new money coming to the district.
“Everything else is not really going to give your district more money to spend then you had in the prior year,” Haney said.
Haney said some items that are in the budget do not have a bill that authorizes the spending.
“These items are in the budget. There’s money set aside, but there’s no bills that authorize that spending. The big ticket item is the property tax bill,” Haney said. “There’s $12.3 million that is waiting for the legislature to come to an agreement on how they want to divvy up that money and provide property tax relief. There’s also $4 million in school funding increases– that again is in the budget, but HB100 during the regular session failed, so no basic allotment increases, no funding for teacher pay increases, no new allotments, no increases to existing allotments.”
Haney said the majority of the time in the legislative session was spent arguing about vouchers. “That really put every public policy discussion on hold because of the fight between the governor and folks in the House over the provision of vouchers. There is money for school choice and money for vouchers in the budget right now. Of course, that money’s not going to get spent again unless there’s a new bill authorizing that, and no bill has passed yet,” Haney said.
Haney said he heard one point made repeatedly.
“This budget, HB1, represented the largest increase in public funding in a generation,” Haney said. “I just want to point out that they’re including things that we don’t usually count as new money for schools.” Haney said there has actually been a decrease since the 87th legislature. “It’s actually a $3.1 billion decline,” Haney said.
Haney said HB3 will increase funding for school safety but it would also increase the amount of regulation as to how that is achieved. “The school districts will get $15,000 per campus,” Haney said. “It requires all districts to have at least one armed individual on site during regular school hours. There is a provision that allows the schools to obtain [a] good cause exception. We’re going to need to wait on TEA [Texas Education Agency] for implementation guidance on what exactly that exception is.”
Haney said TEA is allowed to install a conservator in non-compliant districts–those without an armed individual on site.
“They can install a conservator to force you to comply with those safety standards,” Haney said. Additionally, if a system does not comply the state can take the bond that was meant to be used for other school expenditures and set it aside to force compliance.
“We used to having in Texas this thing called local control where they would actually somewhat trust districts to do their jobs and pass bonds and respond to the interests of voters, and that seems to be eroded more and more every session,” Haney said.
Haney said the legislature could not agree on the property tax bill during the session.
“The House and the governor want to provide property tax relief just by reducing district tax rates. The Senate wants to also reduce district tax rates, but they want to add in an increase in the homestead exemption,” Haney said.
He said the homestead was recently increased from $25,000 to $40,000, and the Senate wants to increase it to $100,000.
“The Senate, to increase it to $100,000, is doing a little less tax compression, so the House wants to do 16.2 cents and the Senate 10 cents along with the homestead exemption increase. That’s really the fight that we’re having right now. It’s gotten pretty bitter, particularly between the governor and the lieutenant governor,” Haney said.
Haney said that if the governor’s version of HB 1 passes, this will impact the schools budget in a historically unique way. “Because if this is going to pass then HB1 will go to the voters for approval in November, you guys [school district] will already have your rate adopted by then, so what’s going to happen is that you’re going to adopt your rate then your assessor-collector is going to, after the fact, reduce your rate and then use that reduced rate for the tax bill that they send out. The rate that you adopt will not be the rate that gets levied if HB1 passes and the governor signs it and it’s approved by voters,” Haney said.
Haney noted that if HB 1 passes, there will be no change in revenue for the school district for the first two years, but after that the cost will be $100,000.
