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2006-2007 Preliminary Budget Considerations (June, 2006)

As the FISD staff and Board develop the budget for the 2006-2007 school year, changes in state law and the needs generated by growth have been the primary topics of discussion.

The 2005-2006 operating budget is $137.8 million, with 97.1 million of that being for payroll and benefits; $12.6 million for contracted services (includes utilities and gasoline); $5.1 million for supplies; and $2.2 million for other operating costs. More than 20 million of the budget is for recapture – money we send back to the state through the “Robin Hood” plan as FISD is a Chapter 41 (property wealthy) school district. Revenue for this budget comes from local tax collections and other local income (comprising 95 percent of the revenue) and state funding. Without considering the recapture payment, the operating budget for 2005-2006 is $117 million.
In preparing for 2006-2007, 469 new employees (professional and support personnel) have been hired at this time to meet the needs of growth and the opening of 6 new schools, two of those being high schools. A few more hires are anticipated as funding information becomes more clear and transfers are finalized and grade level numbers are refined. In October of 2005, FISD had 19,800 students; in the fall of 2006, more than 24,000 students are projected for enrollment, representing a 21 percent increase in student population.

The 2006-2007 budget is projected at $153.4 million, representing a 27 percent increase in expenditures. Of those expenditures, $18.7 million is in payroll for new personnel already hired; $1.9 million is for health insurance for new employees, along with TRS and medicare payments; $4.7 million is for $2,500 in raises for all teachers, nurses, counselors and librarians ($500 of this is in payment to teachers, nurses, counselors and librarians to restore the $500 health benefit funding that had been taken away previously by the state and placed in a TRS pass-through account for reimbursement of health related expenses.); $547,000 is for the additional $500 for support staff to restore the same health benefit from last year; $1.27 million is for an $800 step in pay increase for all returning teachers, nurses, counselors and librarians; and $1.32 million is for a 4 percent of mid-point of salary scale increase for non-teaching employees. Returning teachers will be receiving the equivalent of more than a 6 percent of mid-point pay increase. Another $1.38 million ($275 per high school student) is to be allocated for purposes related to college readiness, advanced academics and high school success.

An additional $4 million increase is anticipated in non-payroll related operating costs to help offset increases in utility and fuel charges. These non-payroll budgets will continue to be looked at for any ability to trim and save.

This $33 million in increased expenditures anticipated at this time comes to $150 plus million. Some personnel hires are pending and the Board must consider some funds to be allocated for the fund balance as well to maintain security and strong bond ratings.

To fund this budget, the Maintenance and Operations tax rate is projected to be $1.21 per $100 of assessed valuation. Senate Bill 1 impacts the M&O tax rate only. Most school districts in the state were at the M&O tax rate cap of $1.50, so they will be experiencing more tax relief – 17 cents of relief, down to $1.33. FISD’s current M&O tax rate is only at $1.32. In cases like FISD’s, districts must multiply their existing tax rate by approximately 88 percent, which will reduce its tax rate to $1.17. Senate Bill 1 then allows local district to add a four cent increase to maintain programs and handle growth, as in FISD’s case, or to reinstate programs, as in the case in districts that were at the tax cap. If the FISD Board approves the four cent increase, which they most likely will, the FISD 2006-2007 tax rate for M&O would be $1.21, eleven cents less than the current rate.

This tax rate would generate $130.2 million based on a preliminary estimate of property values of $10.9 billion at a 98 percent collection rate. Other tax income is anticipated at $7.5 million, which includes ag rollback collections and penalty and interest income. Other income such as rental income and interest earned is estimated at $3.9 million. State funding is anticipated at $11.7 million.

FISD’s debt service commitment for 2006-2007 is estimated at $49.8 million. A tax rate of $.37 cents (it is currently $.31 cents) is anticipated. This would place our projected overall tax rate at $1.58.

Below is a comparison of the estimated tax bill of a resident with a home valued at $230,937 (the current average home value in FISD).

2005 Tax rate and taxes
Market Value $230,937 - $15,000 Homestead Exemption
Tax Rate $1.63/$100
Levy $3,519.77

2006 Projected tax rate and taxes
Using average valued home not considering a raise in appraised value –
Home Value - $230,937 - $15,000 Homestead Exemption
Projected Tax Rate - $1.58/$100
Levy - $3,411.80

Note: From what we know at this time, no provisions were made in this new legislation to modify the tax bill of our citizens over 65 years of age who have frozen taxes.