Members of the Superintendent’s Budget Advisory Council learned that estimated appraisal values for the district will increase a little more than 11 percent this year.
The meeting was held in the administration building Wednesday.
Deputy Superintendent Stephanie Howard said this is good news for the district, but Ector County Independent School District won’t get the certified values until July.
The district’s tax rate is made up of maintenance and operations and interest and sinking, which goes to pay off debt.
Howard said the increase helps on the interest and sinking side of the tax rate.
“… Every penny you can collect on an I&S, you’re bringing that money in, so anytime values go up it keeps you from having to raise that I&S tax rate,” Howard said.
On the maintenance and operations side, typically districts don’t see a lot of state funding increases, so Howard said if a district is going to have more revenue to work with the only route to get there is increased property values.
The maintenance and operations tax rate can’t be set until ECISD gets its certified values from the Ector County Appraisal District.
“And then we have to run these different checks to establish what is our effective tax rate. There are actually calculations. The district has to run those and then get that signed off on that that is indeed the effective tax rate.
Increased values is always a positive for a district, even if we became a Chapter 41 (property wealthy and subject to sending money back to the state), we’d rather have the increased values, even if some of it has to remain at the state with recapture. … The downside is if you’re not having increased revenues or values, you’re losing money and that’s going to hurt you both on the M&O and the I&S side …,” Howard said.
She noted that property value increases not just because property values go up, but more property coming online such as new houses, new construction and new businesses.
The district gets its values certified in July. The tax collector begins assessing them in October, so it’s January before the Texas Education Agency has the numbers, or ECISD’s values, Howard said.
“Therefore, they use prior year values to fund us and collect recapture, if we’re a Chapter 41 in the current year,” she said.
The district uses current and actual numbers to build its budget and the state catches up 12 to 18 months later. This system prevents ECISD from overestimating or underestimating revenues, Howard said.
“If districts work off what the state projections are, they could get to those 12 or 18 months and owe the state money because they really don’t have as many students as the state thought they had based on last year’s information. Or, maybe their values dropped and they didn’t calculate that in … but it’s important that we work off of current year, real data,” Howard said.
On the subject of recapture, under current law Howard said it looks like ECISD would be a recapture district. But depending on what happens with school finance legislation, that law could go away.
Howard noted that the district is monitoring the legislature closely.
“If they raise the basic allotment, which is what the original version of House Bill 3 would do, anytime you raise the basic allotment, you look less wealthy because that number goes up which is what they use to create the equalized wealth level,” Howard said.
“We know the current law is going away in some form or fashion. We don’t know what the new laws will look like. We don’t know what part of current law will stick around, what part of new law will come in. And all of that has all these moving parts,” she added.
If the district falls under Chapter 41, the state would keep $581,000 of the district’s funding allotment, Howard said.
On a separate item, the general fund balance is estimated to be $67,898,987 for 2018-19. This is up from $38,893,336 in 2017-18.
Howard said this is because of the number of employee openings in the district. The state likes districts to keep three months of operating capital on hand.
Because of the tax ratification election passing in November 2018, Howard said the district has been able to keep more funds invested, which also has helped.
The advisory council was formed to ensure that funds from the tax ratification election are appropriated correctly. The council has eight members.
