The Frisco ISD Board of Trustees will meet in special session later this month to approve the District’s combined tax rate for the 2016-17 school year. The special meeting will be held Tuesday, May 31 at 6 p.m. at the Frisco ISD Administration Building, 5515 Ohio Drive in Frisco. It will also include a public hearing.
Residents pay a combined tax rate to Frisco ISD that supports two separate funds for different purposes.
The maintenance and operations (M&O) tax rate pays for day-to-day District operations. More than 80 percent of the M&O budget goes toward payroll.
The interest and sinking (I&S) tax rate, or debt service tax rate, pays off the debt from issuing voter-approved bonds to build new schools, renovate facilities and fund other capital projects. The last referendum was held in May 2014 and will provide educational facilities for up to 66,000 students.
Legally, the District cannot spend I&S funds to pay for daily operations or hire teachers to staff new schools and keep up with enrollment growth.
Trustees will consider raising the M&O rate by 13 cents, from its current $1.04 to $1.17 per $100 of tax valuation. That would mean an extra $37 a month or $443 a year on a home valued at $365,463, the District’s average, if approved by voters. The I&S tax rate is proposed to remain the same, at 42 cents, for a total combined tax rate of $1.59.
If School Board members approve the higher operating tax rate, it would trigger a Tax Ratification Election or TRE, which state law requires to be held within 30 to 90 days of tax rate adoption.
The additional 13 cents would generate about $30 million to help Frisco ISD reduce class sizes, hire more teachers to serve new students and provide additional resources to attract and retain high quality staff.
The District currently enrolls nearly 54,000 students and enrollment is projected to reach about 57,000 next school year. By that time, Frisco ISD will have lost $125 million over six years due to state cuts to a special fund known as Additional State Aid for Tax Reduction or ASATR.
The loss has been absorbed through lower than average employee raises, lower than average teacher salaries, higher class sizes at every level and by not adding additional support staff to keep up with the needs of growth.
The District falls in the bottom 25 percent of area districts for spending on general administrative and maintenance and operations costs.
This school year, the District submitted nearly 300 class size waivers to the state to allow K-4 classrooms to rise above the 22:1 class size mandate, a standard created by lawmakers to limit the size of classrooms. That number amounts to nearly 30 percent of all K-4 classrooms and gives FISD the distinction of being second only to Houston ISD in terms of the total number of class size waivers submitted by school districts across the state.
Currently, Frisco ISD falls in the bottom 25 percent of area school districts for starting teacher salary and average tenured teacher salary. Previous salary increases have been negated by skyrocketing health care premiums and declining benefits under the state health care plan, the only option Frisco ISD can offer its employees.
“After years of absorbing cuts in ASATR funding, we’ve reached a point where we can no longer support our rapid student growth at current funding levels,” said Chief Financial Officer Kimberly Pickens. “The additional $30 million that would be generated by this 13 cents will allow us to continue to open and run new schools, as well as address other areas of need that have fallen behind because of the reductions in ASATR funding.”
One misconception is that Frisco ISD benefits from increasing property values when it comes to the operating budget. That is not the case due to the way Texas funds public education.
For every extra dollar in increased property values at the local level, the state reduces its contribution by a dollar. Revenue is also redistributed from property-rich districts such as FISD to property-poor districts across the state.
“Because of the nature of the formula, we don’t get to retain any of those funds,” Pickens said. “The state calculates how much money we need based on the number and types of students that we have. They subtract the amount we collect in local property taxes and then they provide us with the difference. So as we collect more in taxes, our state portion goes down.
“The only way to generate new funds under the state’s funding formula is by student growth. Unfortunately, as the student population grows, so does the cost of doing business.”
In addition, since Frisco ISD’s operating tax rate was below the state cap when property taxes were compressed by the legislature in 2006, the District is funded at a fraction of the total allowed under the funding formula, a rate well below the state average.
Because of fractional funding and the fact that FISD is not taxing at maximum authority, when lawmakers added funding to public education during each of the last two legislative sessions, the District actually lost money per student. Frisco ISD has lost approximately $400 per student since 2011 due to changes enacted by the legislature.
“We need to correct this problem in order to be on a level playing field with all other school districts in the state of the Texas and until we get on that level playing field, we will always be hurt by legislative actions related to public education funding,” said Superintendent of Schools Dr. Jeremy Lyon.
The good news is, Frisco ISD does benefit from property value growth when it comes to debt management, since it directly impacts the I&S fund.
In the past five years, that rate has remained at 42 cents and is expected to stay at 42 cents for the foreseeable future if current growth levels continue. During that same time period, the District has issued more than $711 million in bonds, built 13 schools and welcomed about 14,000 new students.
“Back in 2014, the District, in full transparency, told the voters as they went into the ballot box for that bond, that the worst-case scenario was a 50 cent tax rate on the I&S side,” said School Board Member John Classe. “Not only are we going to be able to do what we promised in 2014, but we are going to be able to do it at a 42 cent rate.”
But when it comes to the M&O tax rate, help is not on the way. The Texas Supreme Court recently upheld the state’s school funding system as constitutional, and even if lawmakers address school funding as early as 2017, the fix may not create additional revenue for FISD.
“The fact that we don’t retain funds from property value growth, coupled with the fact that we are fractionally funded and facing the elimination of ASATR in 2017 means that while we have this ever-growing capacity to finance debt and build schools, our capacity to adequately staff those schools is shrinking,” Pickens said.
Frisco ISD leaders will present a final proposed 2016-17 budget in June, based on the tax rate approved by trustees in May.
The District’s recommendation is to increase the M&O tax rate by 13 cents in order to uphold the priorities of FISD and maintain standards expected by the community. The increase will also bring the District’s available revenue from $7,500 up to $8,100 per student, closer to the average among school districts in the area.
“This plan allows us to address the growth, maintain a balanced budget for at least the next three years and maintain a reasonable fund balance for at least the next three years,” Pickens said.
Follow the following links to read more about the budget development process and financial challenges facing Frisco ISD.
Clint Bledsole, a member of the CoServ Board of Directors, was one of the donors present Tuesday night. CoServ has long been a supporter of the Frisco Education Foundation and Frisco ISD educators.
“Words cannot begin to describe the passion and commitment she [Ms. Sternitzke] has to us students, both as our friend and our teacher,” said Harrison Hicks, a graduating senior from Wakeland High School. “It takes a truly special type of person to take a subject like chemistry and make it a fun and exciting class where it is a joy to come to class each day.”
