We’ve previously covered the upcoming Tax Ratification Election (TRE) in Plano ISD, set to appear on the November 5th 2013 ballot. Voters will be asked to approve a net property tax increase of 8 cents.
The district’s propaganda claims the tax hike is necessary to cover a $20 million shortfall that would allegedly force 300 layoffs and a reduction in educational programs. The district blames the shortfall on the partial restorations of state funding cuts made during the 82nd legislative session.
Although there have been abrupt changes in state funding in recent years, the district’s sob story is a half-truth.
According to their budget, out of $650 million in annual expenditures last year, PISD spent well over $105 million on debt service alone. The tax increase is indirectly driven by excessive borrowing, not funding cuts.
Taxpayers are assessed two taxes by school districts; the M&O and I&S rate. M&O covers the district’s operating budget, while I&S covers its debt obligations (principal and interest). It is important to note that bonds don’t just finance classroom expansion; they’re used for school buses, uniforms, ipads, renovations and other ‘enhancements’.
Since 1993, the M&O tax rate in Plano ISD has been downward trending, with a significant reduction in state ‘recapture’ beginning in 2005. Recapture is the portion of M&O taken by the state’s ‘Robin Hood’ funding formula, which peaked at 48 cents in 2003. Today, it’s only 7 cents, or 85% lower, increasing the percentage of local tax revenue kept by the district.
Following the recapture reduction, the legislature also increased state funding. Total revenue per pupil peaked in 2011, the seventh highest in the State of Texas.
The recent reductions in state funding cited by the district occurred only after a substantial increase…hardly a fiscal crisis.
Additionally, PISD has accumulated $150 million in cash, enough to pay 100 additional entry-level teachers over the next decade without going below their recommended fund balance. Since three years ago when approximately 230 teachers were laid off, the average salary of administrators has increased $4,300, while teacher’s pay has decreased $900.
Thanks in part to the 85% decrease in recapture, the local M&O tax burden is at a twenty year low, down 46 cents overall, or 30%, since 2005. Unfortunately, the good news stops there. Due to record levels of debt, the I&S rate has increased over 230% over the same period, from 14 cents in 1993 to over 33 cents today.
Stated differently, the reduction in recapture accompanied by an increase in state funding has overshadowed the ever increasing I&S tax burden necessary to float PISD’s debt obligations, which currently stands at $975 million, excluding interest!
If the borrowing binge continues, the I&S rate will eventually be increased…for the tenth time in 20 years.
The only way school boards will be forced to reprioritize spending is if voters elect principled leaders and limit their ability to tax and borrow. As we’ve seen both in Washington and Austin, politicians and bureaucrats won’t limit themselves.
Politics goes to those who show up. How will you vote on November 5?
