Lancaster Independent School District trustees are calling for a 13-cent increase in the district’s operating property tax rate, triggering a Tax Ratification Election (TRE) that requires voters to approve the rate hike. Officials scheduled the election in August, rather than the uniform election date in November when voter turnout is higher.
The rate change is part of the district’s proposed tax rate “Swap and Drop” in which the 13-cent increase in the maintenance and operations (M&O) rate is offset by a 14-cent decrease in the debt service or interest and sinking (I&S) rate — dropping the total tax rate for 2018 by a penny.
Lancaster ISD board members voted July 12 to change the district’s property tax rate from $1.54 to $1.53 per $100 of assessed taxable value via the “swap and drop” plan and scheduled a TRE for August 25. Now it’s up to local voters to decide.
A 13-cent increase would raise the operations portion of the school tax rate from $1.04 to $1.17 — the maximum allowed by state law. The debt repayment portion of the rate would be lowered to $0.36 for 2018.
Voter approval through a TRE is required for a school district’s operating tax rate to exceed $1.04.
If voters approve the swap and drop, the total tax rate will effectively be raised by 10.2 percent and will raise taxes for maintenance and operations on a $100,000 home by approximately $130. The average homeowner’s total tax bill would go up by $224 a year, from $1,483 to $1,707 – a 15-percent increase that reflects rising property values.
LISD officials estimate they would collect an additional $2 million a year for their operations budget from the rate increase.
What will Lancaster ISD do with the additional $2 million?
“We want MORE,” says LISD’s TRE webpage. “MORE for our students. MORE Academic Options and Experiences. MORE Safety and Security. MORE instructional resources and highly-qualified educators. … MORE Revenue into our schools.”
Without specifying dollar amounts, the district says it will spend the tax increase on technology upgrades, security improvements, retaining and hiring “highly qualified staff,” providing student transportation, and improving student programs.
A June presentation on the TRE by district CFO Shonna Pumphrey explained the convoluted system by which the state allocates funds based on additional pennies of M&O tax rates, rewarding districts’ extra tax effort. Maximizing the district’s M&O tax rate via the tax swap and drop would allow LISD to access “the highest funded enrichment pennies ever provided by the state,” according to the presentation. “In all, these 13 pennies will provide 26 state dollars for every 100 Lancaster ISD dollars — for a net total of $2,000,000. That’s an average yield or Return on Investment (ROI) of 26%.”
What will be the impact of lowering the district’s debt service rate?
The district raised its I&S tax rate by 17 cents in 2015 with passage of a $126 million bond package. LISD taxpayers owed $246 million in outstanding debt principal and interest as of 2017, according to the Texas Bond Review Board. Since then, the district issued its final remaining $67 million in debt principal from the 2015 bond program.
“We will be able to pay this additional debt payment and generate $2 million in additional M&O funds and reduce the tax rate $0.01 if voters approve the TRE Swap and Drop,” according to the CFO’s presentation. “Current law allows school districts to use I&S and M&O fund balance to pay debt. The additional M&O funds generated by the $1.17 rate allow M&O and I&S fund balance to be used to pay debt.”
Will the district use additional M&O revenue to pay down debt? Or will it simply raise the I&S rate again if voters elect to lower it in the TRE?
If the swap and drop passes, the school board is free to raise the I&S rate — without further voter approval — by as much as 14 cents, back to the maximum allowed $0.50 (or higher, as the district noted in its 2015 Bond FAQs), to service its debt. The tax swap raises district taxpayers’ potential total property tax rate to $1.67.
Lancaster ISD serves 7,370 students across 11 campuses. In 2016-17, the latest school year for which data is available, the district took in about $8,500 per student in operating revenue, 63 percent of which came from the state.
LISD Superintendent Elijah Granger is paid a base salary of $215,704, according to his current contract for January 2018 through June 2021. The superintendent has a “cabinet” of 12 assistants, officers, and directors whose combined annual salaries total $1.34 million, according to data from the Texas Education Agency website. These figures exclude benefits, pension contributions, and other perks.
Lancaster is one of several Metroplex-area school districts holding TREs for operating tax rate increases for 2018; all are asking for the maximum $1.17 M&O rate.
LISD trustees set their TRE for Saturday, August 25, rather than choosing the uniform election date in November, when voter turnout is higher. The district is using the controversial tactic of “rolling polling” during early voting. In addition to the main polling location at Lancaster High School, mobile voting sites will be set up at various LISD campuses August 8-18. Teachers and staff return to work on August 7.
Current Tax Rate: $1.54 per $100 of valuation
Proposed Tax Rate: $1.53 per $100 of valuation
M&O Rate Increase: 13 cents (from $1.04 to $1.17)
Additional Annual Revenue: $2 million
TRE Date: August 25
Complete information about the tax ratification election is online at https://www.lancasterisd.org