Keene ISD

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Keene ISD

• Understanding the
• Tax Rate Election (TRE)
• to be held
• November 3, 2009

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Factual information for voters

• This information is factual and is intended to
  provide the voters in the Keene ISD with
  information about the upcoming Tax Ratification
  Election (TRE) to be held on November 3, 2009
  The Keene ISD encourages all voters to become
  informed about the issues and to vote in the TRE.

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MO Taxes

• School district tax rates in Texas have two
  parts, a Maintenance and Operations tax rate
  (MO), and an Interest Sinking (IS) tax rate.
  MO taxes pay the operating expenses of the
  district, such as salaries, fuel, utilities,
  supplies, equipment, and contracted services,
  among others.

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IS Taxes

• Interest and Sinking Fund (IS) taxes, or debt
  taxes, pay principal and interest on
  voter-approved bond issues to construct or
  improve facilities

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The Genesis of HB1

• The Texas Supreme Court in its West Orange-Cove
  II decision required the Texas Legislature to
  make certain changes to the funding of the Texas
  public schools. The new law would have to
  reduce school district tax rates and allow
  districts to raise their tax rates to obtain
  additional funds to preserve their meaningful
  local discretion.

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Keene ISD can obtain additional State Aid by
increasing its MO tax rate

• Keene ISD receives significant state aid for
  increased MO tax effort. HB1 requires all
  school districts to ask voters to approve any
  increase in MO tax rate by calling a Tax
  Ratification Election (TRE) whenever they
  increase their MO tax rate above 1.04.

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Federal Stimulus Funding 2009-2011

• Keene ISD will receive 373,333.00
• Funding will not be continued after 2011
• HB 3646 mandated teacher pay raise which is
  funded by Stimulus funding but must be sustained
  by school districts after funding goes away
• Stimulus Funding is not new money and is needed
  to balance districts budget

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Two major actions takenMajor action 1

• On August 31, 2009, The Keene ISD Board of
  Trustees took two major actions.
• Their first major action
• Adopted a tax rate of
• 1.1700 MO
• 0.3423 IS
• 1.5123 Total

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Two major actions takenMajor action 2

• Their second major action taken on August 31,
  2009 was a contingent action
• If voters approve the 1.5123 total rate, they
  decreased the debt rate 0.13, from 0.3423 to
  0.2123, with a total rate of
• 1.1700 MO
• 0.2123 IS
• 1.3823 Total

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An opportunity to reduce our Debt Rate (IS)
occurs now

• Current law allows school districts to use MO
  funds to pay debt.
• The additional MO funds generated by the 1.17
  rate allows other MO funds to be used to pay
  debt.
• The 13 additional MO pennies produce
  approximately 300,000 more state dollars than 13
  debt pennies would.
• We can reduce our debt rate by 0.13 cents, from
  0.34 to 0.21, by using MO funds for debt
  payments.

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Tax Rate Election Summary

• We are able to generate an additional 776,000
  for MO by increasing our MO Tax Rate 0.13.
• We are able to reduce our debt rate 0.13.
• The final Total Tax Rate is 1.3823, 0.0377
  lower than the 2008 Total Tax Rate.
• Therefore, we are able to generate 776,000 if
  the Tax Rate Election is successful.

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No matter what voters do, Tax Rate will be 1.3823

• Therefore, if voters do not approve the 1.5123
  total rate, they effectively lowered the MO
  rate 0.13, from 1.17 to 1.04, and kept the
  debt rate at 0.3423.
• 1.0400 MO
• 0.3423 IS
• 1.3823 Total

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TRE Ballot Rates and possible resulting Tax Rates
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Keene ISD can maximize State Aid for its students

• The way Keene ISD voters can maximize state
  funding for its children is to approve the rate
  of 1.5123 adopted by the Board of Trustees in an
  election to ratify the school tax rate.
• In all, the state will provide 209 state dollars
  for every 100 Keene ISD dollarsfor a total of
  776,000.

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House Bill 1 Consequences

• HB1 will let KISD generate only the amount of
  funds per WADA it received in 2006-2007 under old
  law by taxing at its compressed rate (1.00)
• A district cannot raise its rate above its
  rollback rate without a Tax Rate Election (TRE)
• If a district ever needs more money than it
  received in 2006-2007 and from the additional
  .04 it must call a Tax Rate Election (TRE).
• At some point every district will have to call a
  TRE.
• The question is not if a district will call a
  TRE, it is when.

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The opportunity to generate additional funds
occurs now.

• Keene ISD can generate an additional 776,000
  this year, and every year afterwards by
  increasing the MO rate from 1.04 to 1.17, an
  increase of 0.13.
• Keene ISD will still have an MO rate that is
  0.33 lower than its 2005 MO rate of 1.50.
• Keene ISD cannot increase its MO tax rate
  without a change in state law.

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An Additional 776,000 if voters approve TRE
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Keene ISD MO Revenues and Tax Rates
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Keene, Austin, Dallas, IFA/EDA Yield/Penny
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Keene ISD-as rich as Austinand as Dallas was in
2005

• Our penny raises approximately 13 per WADA
• The guarantee for the 6 Austin pennies is
  approximately 59 per WADA. The state gives us
  46 per WADA per penny.
• The guarantee for the 11 Dallas pennies is
  approximately 32 per WADA. The state gives us
  19 per WADA per penny.
• In all, we make 776,000 from the state

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Effects of TRE for Keene ISD

• Total Gain from TRE 776,000
• Transfer of Debt Services 340,000
• Net Gain from TRE 436,000

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What can 776,000 additional dollars do for Keene
ISD?

• Make Debt Payments
• Increase Instructional Effectiveness
• Salary Increases
• Facilities Improvements HVAC, etc.
• Fuel and Utility Costs
• Supplies and Materials

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How can we drag our new state tax dollars back to
our community?

• The way to bring our share of the new state
  dollars back to our community is by giving our
  voters the opportunity to approve the 1.51 total
  rate adopted by the Board of Trustees (1.17 MO
  and 0.34 IS). Ultimately, the voters of Keene
  ISD will decide.

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Economic Development

• Economists say that a dollar bounces around in
  local economy about 7 times. What other activity
  could have the positive economic impact on our
  community that 776,000 can have?

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Previous HB 1 Rollback Elections

• In the 3 years of HB1, 252 school districts
  called rollback elections. The voters in 178 of
  them approved the rate adopted by the board. The
  voters approved the tax rates in 71 of the
  elections.
• 100 of tax rate swap TREs have been approved by
  voters

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An Important Question

• Are the voters of Keene ISD willing to approve
  the 1.17 MO and the 0.21 IS for a total rate
  of 1.38 in order to generate an additional
  776,000 for Keene ISD to spend on the education
  of their children?

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Taxes still Frozen on Over 65 and Disabled
Homesteads

• Tax bills on Over 65 or Disabled Homesteads will
  not go up. They will never go up unless
  improvements are made to the homestead.

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The results of approving the 1.51 tax rate are

• A total tax rate of 1.38, because of previous
  board contingent action to reduce the debt rate
  0.13 if voters approve the 1.51 total tax rate.
• Significant additional dollars which will
• Help meet and exceed state and national standards
  for all students
• Maintain and improve facilities
• Provide competitive salaries to retain and
  attract highly qualified staff
• Address rapidly increasing operational costs
• No change in tax rate from 2008.
• No future MO tax increases without a change in
  state law.
• Significant economic development in the Keene
  Community

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Results of not approving the 1.51 tax rate

• 1. The tax rate will remain at 1.38, the same
  result if voters approved the 1.51.
• 2. The district will not gain an additional
  776,000 in state aid this year
• 3. No change in tax rate this year from 2008.