Because of rapid growth, Frisco ISD relies on some amount of property value lag each year to balance the budget. This is done conservatively, though, and FISD always plans as if the growth will slow. This means FISD generally receives some amount of “extra” or surplus revenue each year when values grow by more than the conservative estimates. That surplus revenue goes into fund balance to help the District cover bills each fall before FISD begins collecting taxes and state aid.
Fund balance is not a savings account – it’s a snapshot of the District’s assets on the last day of the fiscal year. Think of it like taking a snapshot of your bank account the day after you get paid. Just as you use the money in your bank account to pay bills throughout the month, school districts use fund balance to pay bills during the first three or four months of the school year because districts don’t get paid again until late in the fall. As Frisco ISD grows, monthly bills also grow, so it’s important for the District’s fund balance to grow proportionally. Property value lag is the mechanism by which FISD makes sure the fund balance is healthy enough to pay all of the bills necessary during the fall semester.
Wondering what property value lag is? Watch an explanation at the 10:00 minute mark in the Looking Beyond Your Tax Bill