A tax swap is a term used when school districts move or swap pennies between the two portions of the total tax rate: the maintenance and operations (M&O) tax rate, which pays for day-to-day expenses, and the interest and sinking (I&S) tax rate, which pays off debt from issuing bonds. Frisco ISD proposes to move 13 pennies from the I&S tax rate to the M&O tax rate for the purpose of generating additional revenue for operations.

The School Board has already approved reducing the overall tax rate by two pennies. The TRE asks voters whether to approve the 13-cent increase to the M&O rate. If voters approve, a Board resolution that was signed on August 20 will take effect to facilitate the tax swap. The total tax rate for 2018 will end up at $1.44 per $100 valuation, two cents lower than the total tax rate from 2012 to 2017.

In 2016, Frisco ISD asked voters to ratify a 13-cent increase to the total tax rate.  In 2018, the proposed tax swap includes a two-cent overall decrease to the total tax rate. 

In addition, in 2016, only one proposition was on the ballot – a Tax Ratification Election. The Board of Trustees put two propositions – a Tax Ratification Election and a bond election – on the November ballot.

Frisco ISD can only provide factual information regarding an election. By law, the District cannot use persuasive language or advocate for the passage of ballot measures. Employees are prohibited from using District funds and resources, including FISD-owned facilities, to take or share a position on ballot measures. Only outside entities and individuals, acting on their own time and using their own money and resources, can engage in advocacy or political advertising.

Frisco ISD has worked to engage the community in the planning and decision-making process over the last two years. The ballot propositions are based on community recommendations, as well as input and feedback gathered in dozens of stakeholder meetings.

The Priorities-Based Budget Stakeholder Committee formed in fall 2016 to examine District spending and make recommendations to balance the 2017-18 budget. In 2017-18, the Long-Range Planning Committee explored the District’s high school model and recommended FISD continue to use the current model, which enrolls approximately 2,100 students in grades 9-12 at each high school. This has been called the “student opportunities model.” In May 2018, the Facilities & Programs Evaluation Committee formed to study student enrollment projections, school building capacities and potential facility and maintenance projects. The group also examined operational costs associated with smaller class sizes, additional academic programs, increased student intervention and more.

The Facilities & Programs Evaluation Committee presented its recommendations to the School Board in August 2018. The bond proposition was developed by the committee. The Tax Ratification Election was then recommended by District administration.

Frisco ISD is asking voters to consider both propositions at the same time because they impact one another and the District’s long-range plan. The bond proposition would provide funding to build and repair schools, add technology and security measures and more. These projects are paid for by selling bonds, which are then paid off using revenue generated by the District’s interest and sinking (I&S) tax rate. The Tax Ratification Election would provide additional operational funding to reduce class size, increase student intervention, expand academic programs and more. These day-to-day expenses are paid for using maintenance and operations (M&O) funds. Although the funding mechanisms that support the proposed projects are different, they do impact one another. For example, the proposed bond projects would have an estimated annual impact to the operational budget of $27.715 million once completed.

A driving factor in the timeline for the development of the bond program was student enrollment projections at the high school level, as shown below. These projections, developed by the District’s external demographer Population and Survey Analysts (PASA), show several high schools will exceed their design capacity of 2,100 students between 2020-2022 based on current attendance zones. Eighty-five to 95 percent campus utilization, or functional capacity, allows for special program use and flexibility in classroom seating arrangements.

In addition, several schools are projected to exceed 2,189 students, which is the current University Interscholastic League (UIL) cutoff between the 5A and 6A classification. Frisco ISD engaged the community in fall 2017 regarding its high school model. Recommendations made by the Long-Range Planning Committee, and a survey taken by more than 4,000 respondents, showed the community’s preference to keep current high school model.

High schools take approximately three years to design and build. There are funds available in the 2014 bond program to build high school #11, which Frisco ISD expects to open in 2022 based on current projections. The proposed 2018 bond program would provide funds for high school #12, which could also open as early as 2022 if design work begins in 2019.

Frisco ISD will continue to engage the community regarding spending and long-term planning and decision-making. The Long-Range Planning Committee, an advisory committee made up of parents, community members and staff, will be utilized for feedback regarding budget development and will make recommendations to the School Board and administration regarding District practices, programs and policies.

Each spring as part of the budget development process, Frisco ISD reviews and updates projected revenue and anticipated expenditures for the coming school year. This process, which includes stakeholder feedback and input, is based on student enrollment projections and any anticipated additions or changes to the programs, services and benefits provided by the District. Scorecards are used to rank the priority of each new funding request. A public hearing is held before the budget is adopted by the Board of Trustees. State procurement law and local Board policy requires competitive purchasing to occur. The School Board must also authorize the issuance of bonds before a sale occurs.

These laws and processes, along with advisory committees such as the Long-Range Planning Committee, provide transparency and oversight regarding the District’s financial practices. In addition to continued community engagement, the District plans to continue reporting information to the public regarding spending and potential future projects. Leaders are currently exploring ways to help make that data more accessible and user-friendly for residents and taxpayers.

The total 2018 tax rate will be $1.44 per $100 valuation. That is two cents lower than the total 2017 tax rate of $1.46 per $100 valuation and will reduce the number used to calculate a property owner’s tax bill.

The total tax rate is actually made up of two separate rates – one for maintenance and operations (M&O) and one for interest and sinking (I&S). The Board of Trustees adopted an M&O tax rate that is $0.13 higher than the current M&O tax rate of $1.04. That increase alone requires a Tax Ratification Election, which asks voters whether to ratify, or approve, the Board’s decision to increase the M&O tax rate. Simultaneously, the Board has adopted a resolution to decrease the I&S tax rate by the same $0.13 if voters approve the higher M&O rate, therefore eliminating any impact on property owners from a higher M&O tax rate.

The total 2018 tax rate will be $1.44 per $100 valuation, and the outcome of the TRE will determine whether the $1.44 is split between $1.17 for M&O and $0.27 for I&S, or $1.04 for M&O and $0.40 for I&S.

The proposed projects would not impact the total 2018 tax rate, which will be 1.44 per $100 valuation, two cents lower than the tax rate from 2012 to 2017.

Homeowners aged 65 and older are eligible to receive a $10,000 residential homestead exemption in addition to the general $25,000 exemption available to all homeowners. With the exemption, school taxes cannot increase for someone over age 65 so as long as the homeowner owns and lives in the same home. The tax ceiling is the amount the owner pays in the year that he or she qualified for the exemption. The school taxes on that home may go below the ceiling, but school taxes will not be more than the amount of the ceiling. Read more about this exemption from the Texas State Comptroller.

Unlike the funding formula for maintenance and operations, which works in such a way that school districts do not benefit from additional property value, Frisco ISD generates more I&S revenue when the tax base grows due to new development or rising property values. This has allowed FISD to pay more debt each year without increasing the tax rate.

In addition, 2018 is the first year in more than 20 years that FISD has not had a school under construction. Although Frisco ISD is still the fastest growing school district in Texas, enrollment is growing at a slower pace than just a few years ago. FISD has been able to address some of that enrollment growth with existing building capacity, though more schools will still be needed in the future, just not as quickly as before. As building needs slow down, the rate at which FISD issues debt will also slow down.

Both factors – a growing tax base and a slowdown in student enrollment growth – provide flexibility for Frisco ISD to shift pennies between the two tax rates to increase revenue for daily operations. There is enough capacity within the I&S fund and available revenue sources for FISD to lower the I&S tax rate a total of 15 cents, while still meeting its debt obligations and issuing new debt. When offset by the 13-cent increase to the M&O tax rate, the resulting decrease is two cents.

Current projections show that FISD could maintain a tax rate of $1.44 per $100 valuation – $1.17 for operations and $0.27 for debt – for two to five years, depending on a variety of economic factors that are beyond the District’s control, such as property value growth, interest rates and enrollment growth. The debt tax rate is set each year based on the amount of revenue needed to cover debt expenses. Districts cannot raise the rate higher than what is necessary to generate funds sufficient to cover expenses. It cannot be raised arbitrarily or held arbitrarily high. 

When the tax base grows and property values rise, school districts automatically generate more revenue to pay off debt from issuing bonds. The interest and sinking (I&S) tax rate is based on a simple formula: property values multiplied by the tax rate equals total revenue.

The maintenance and operations (M&O) formula is a lot more complicated, because it is not based on property values. School finance law establishes the total amount of operational funding due to a school district based on its tax rate and the number and type of students it has. When more money is generated by local taxpayers to cover that amount, the state reduces its share proportionally the following year. When a school district’s tax rate generates more operational revenue than the state has determined the district needs, the school district pays recapture to the state. Therefore, unlike cities and counties, higher out-of-pocket costs for homeowners do not necessarily equal more revenue for the school district. 

The interest and sinking or I&S tax rate is set by the School Board each year based on two key factors: (1) the amount of debt expected to be paid off, and (2) estimated property tax revenue. When setting the budget and planning the tax rate, the District aims to generate enough revenue to meet all annual debt obligations and maintain approximately 10-15 percent of annual debt service requirements in fund balance. As a fast-growth district, that fund balance target provides Frisco ISD with the flexibility to issue additional debt when needed and ensure funds are available to make any necessary payments before tax revenue is collected. In 2018, due to conservative property value growth estimates, FISD’s ending fund balance exceeded the target of 10-15 percent. That excess fund balance coupled with adjustments to property value estimates has given FISD the capacity to lower the I&S tax rate in 2018.

Each year, the School Board adopts both portions of the total property tax rate – M&O and I&S. The interest and sinking or I&S tax rate, which pays for debt generated by bonds, is based on the amount of revenue required to cover debt expenses. By law, I&S revenue cannot be used for any purpose other than the retirement of debt.

While an election is not required to raise the I&S rate, school districts cannot have a rate higher than what is necessary to cover debt expenses. The rate cannot be raised arbitrarily or held arbitrarily high, since the District only has so much debt.

You can learn more about the laws surrounding tax rate adoption from the Texas State Comptroller.

Frisco ISD’s tax rate has been one of the lowest in Collin and Denton counties for many years. From 2012 to 2017, the total tax rate remained unchanged at $1.46 per $100 valuation. The maximum tax rate allowed under state law is $1.67 per $100 valuation.

The total 2018 tax rate of $1.44 per $100 valuation gives Frisco ISD a tie for the second lowest tax rate among school districts in Collin County and the fourth lowest rate in Denton County, based on the other districts’ 2017 tax rates. (Many districts have yet to approve their 2018 tax rates).

As shown below, FISD is also among four districts in Collin and Denton counties that have yet to pass a TRE.

View Frisco ISD tax rate history.

The vast majority of funding for public education in Texas comes from property taxes levied by local school districts and state funding. The state establishes the total amount of state and local funding due to school districts under Texas school finance law. 

A school district’s local property tax rate is actually made up of two separate tax rates that support two separate funds. Specific rules govern how these funds can be spent. The maintenance and operations (M&O) tax rate pays for staff, utilities, supplies, general maintenance of facilities and all the costs associated with running schools on a daily basis. The interest and sinking (I&S) tax rate funds the costs generated by the issuance of schoolhouse bonds. Bonds pay for building new facilities, renovations of existing facilities and large infrastructure upgrades.

Learn more about school finance in Texas and how it affects Frisco ISD at this link. 

Chapter 41 of the Texas Education Code (TEC) makes provisions for certain school districts to share their local tax revenue with other school districts. For the purposes of the school finance system in Texas, districts are designated as either Chapter 41 or Chapter 42 districts. The relative wealth of the school district is measured in terms of the taxable value of property that lies within the school district borders divided by the number of students in weighted average daily attendance (WADA). Chapter 41’s provisions are sometimes referred to as the “share the wealth” or “Robin Hood” plan because districts subject to Chapter 41 of the TEC are required to share their wealth with other school districts. The funds that are distributed by Chapter 41 districts are “recaptured” by the school finance system to assist with the financing of public education for all school districts.

For more information about Chapter 41 Wealth Equalization, visit the Texas Education Agency website.

It is hard to predict what changes the State Legislature may make to the school finance system in the 2019 legislative session, if any. Lawmakers were unable to reach consensus during regular and special sessions in 2017 regarding the best course of action, despite a 2016 ruling from the Texas Supreme Court that the system needs "transformational, top-to-bottom reforms.”

One topic that divided House and Senate education leaders was a push for “school choice” in the form of vouchers, tax credits or education savings accounts, which would divert public funds to private schools that are not held to the same accountability and transparency standards as public schools. The Texas Public School Finance Commission was created to study the following issues and develop recommendations for the Legislature to consider:

- The purpose of the public school finance system and the relationship between state and local funding in that system;
- The appropriate levels of taxes for local maintenance and operations, plus interest and sinking funds, necessary to implement a public school finance system that complies with the requirements under the Texas Constitution; and
- Policy changes to the public school finance system necessary to adjust for student demographics and the geographic diversity in the state.

The deadline for the commission to make its recommendations is Dec. 31, 2018. Initial recommendations made by the commission’s three committees include many ideas for allocating existing education dollars differently. These types of recommendations would benefit some school districts, while hurting others. To date, none of the initial recommendations from the Texas Public School Finance Committee include additional revenue for public education. 

Frisco ISD funds its contributions toward the construction of City-owned facilities, such as Toyota Stadium and the Ford Center, through what’s known as a Tax Increment Reinvestment Zone (TIRZ). A TIRZ is a special taxing district used by many local governments for economic development. A TIRZ captures any growth in property tax value, from the time the TIRZ is created to present day, and puts the tax revenue generated from that change in value into a separate fund, which can be used on projects that promote future growth and expand the tax base.

Frisco ISD has utilized revenue from the TIRZ to help fund projects that allow access and use of world-class professional stadiums at a much lower cost than if the facilities were owned and operated by the school district. In addition, unlike any other TIRZ in the state, 100 percent of the annual revenue generated by Frisco ISD’s combined tax rate, after paying the school district’s agreed-upon portion of partnership debt, is returned to FISD to help finance the construction of new schools. That mechanism has allowed Frisco ISD to maintain a relatively low debt service tax rate while building to keep up with fast growth. Without it, Frisco ISD’s debt service tax rate would need to be higher to accommodate annual debt payments.

After the TIRZ was created, the state of Texas actually changed the law to prevent other school districts from entering similar agreements. That’s because the TIRZ removes a portion of the District’s property wealth from the equalized state funding formula, which determines how much school districts receive from the state for day-to-day operations. Because the property value isn’t factored into that calculation, the revenue it generates is not subject to recapture by the state for distribution to property-poor districts across Texas.

The equalized funding formula also explains why the TIRZ does not reduce the amount of revenue available for day-to-operations. Under the formula, adding taxable value does not increase operations revenue over time. When local property tax collections rise, state aid decreases to school districts by an proportional amount the following year.

The majority of budget surpluses over the last few years can be attributed to two things: (1) property value lag, and (2) not spending 100 percent of the budget. Property value lag is a term the school district uses to describe the one-year lag in the state’s funding formula. The basic state funding formula looks something like this:

Students * District Allotment per Student = Total Revenue
Total Revenue = Local Share + State Share

While FISD collects its local share of revenue based on current property values, the state actually uses last year’s property values to determine its share. When property values are rising, the state essentially overpays FISD for a year because it is using last year’s information. Frisco ISD does not rely on that overpayment when setting the budget because the additional funds are only available for one year until the formula catches up and the state reduces its contribution to Frisco ISD by a proportional amount the following year. Click here to see a visual representation of the impact of property value lag or watch the video below.

Not spending 100 percent of the budget is the other major factor that has contributed to budget surpluses in recent years. A school district budget is divided up into hundreds of individual department and campus budgets, which are then divided further into different types of accounts and activities. Generally, none of those departments or campuses spend every budget account down to zero. When you aggregate everything that was left unspent at the end of the year, it amounts to somewhere between 2-3 percent of the budget. Because FISD is so large, 2-3 percent is $10-$15 million. Like property value lag, this kind of savings is not guaranteed every year, so it isn’t factored into long-term financial plans.

A bond election authorizes a school district to issue debt to pay for building new facilities, renovations of existing facilities and large infrastructure upgrades.

Once authorized by voters, bonds are sold at the discretion of the School Board in accordance with the law. The Board of Trustees has full authority to determine when and how bond funds are spent, including the authorization of a land purchase, start of building construction or purchase of technology or school buses, for example. It is possible for the total cost, timing or nature of anticipated bond projects to change based on enrollment growth, market conditions and other external factors. For example, due to the soaring cost of land and a slowdown in enrollment growth, Frisco ISD reprioritized 2014 bond funds towards land that had been previously planned for an elementary school (ES #45).

In May 2014, voters authorized $775 million in bonds to build new educational facilities to serve students as the District continues to grow. The program also included additions and renovations to existing facilities and funding for technology, security, transportation and energy management projects through 2019. A total of $170 million of bond authorization remains unspent, including funds planned for two elementary schools and one high school. Learn more about completed and future 2014 bond projects.

When the District went to voters with the 2014 bond referendum, it was stated that the bond program could take the debt service tax rate to the maximum of 50 cents. That never occurred due to the FISD’s growing tax base, low interest rates and the District’s efforts to pay off and refinance prior debt. Learn more about that here.

From 2012 to 2017, Frisco ISD’s total tax rate remained unchanged at $1.46 per $100 valuation, including 42 cents for debt service. During that same time period, FISD issued more than $845 million in school building bonds, built 17 schools and welcomed about 16,000 new students.

Projections for the 2018 bond program show FISD could issue $691 million in new debt and meet its existing debt obligations while also lowering the total tax rate by two cents. Current projections show that FISD could maintain the two-cent lower tax rate for two to five years, depending on a variety of economic factors that are beyond the District’s control, such as property value growth, interest rates and enrollment growth.

To be conservative, FISD uses an assumed interest rate of 4.75 percent. Frisco ISD is currently selling debt below 4.00 percent. If interest rates remain low, it will create additional capacity to hold the debt tax rate steady.

Frisco ISD used architectural consultants as well as a third-party pricing firm to estimate costs for each bond project. The estimates are based on recent, similar projects bid in Frisco ISD and other client school districts, as well as inflationary projections. Soft costs such as architectural, engineering and third-party testing fees were also estimated based on the most recent projects.

Frisco ISD is experiencing a slowdown in the rate of student enrollment growth, but the District remains the fastest-growing school district in the state of Texas. Over the past five years, FISD has grown an average of 3,053 new students per year, or an average of 5.92 percent annually. Projections estimate an average increase in student enrollment the next five years of 1,790 students per year, or 2.82 percent annually. That is equal to an estimated 8,953 additional students over the next five years, or 12,000 students by the 2025-26 school year. The chart below provides more detailed information regarding historical and projected enrollment growth.

Projections from external demographer Population and Survey Analysts (P.A.S.A.) show approximately 12,000 new students will enroll in Frisco ISD over the next seven years. Seven new campuses – including two high schools, two middle schools and three elementary schools – are proposed to accommodate student capacity. This assumes the District will continue to build high schools that enroll approximately 2,100 students in grades 9-12, as recommended by the Long-Range Planning Committee.

Funding for three of the new schools – one high school and two elementary schools – is authorized under the 2014 bond program. The 2018 bond proposition includes funding for the other four schools – one high school, two middle schools and one elementary school.

Frisco ISD sought the input of parents and community members regarding its high school model in fall 2017. A clear majority of members of the Long-Range Planning Committee, as well as 80 percent of respondents to a community survey, expressed support for the District’s current model of 9-12th grade high schools with a capacity of 2,100 students. That feedback played a key role in the development of the proposed bond program and the inclusion of funds to build the District’s 12th high school. Committee members cited several benefits of the current model, including the many academic and extracurricular opportunities available to students in smaller high schools. Estimates show that the cost for operating more smaller schools is not significantly higher than the cost of operating fewer larger schools, about three to five percent more. Learn more here.

In addition, Frisco ISD’s oldest high schools – Frisco, Centennial, Wakeland, Liberty, Heritage and Lone Star – were originally designed and built to accommodate up to 1,800 students. From 2011 to 2016, the school district expanded each one of those campuses to accommodate another 300 students for a total of approximately 2,100 students. Those additions allowed for more growth prior to rezoning and provided additional capacity in the District equivalent to adding another high school. (Six high schools with 300 student additions serves 1,800 more students).

FISD’s four newest high schools – Independence, Reedy, Lebanon Trail and Memorial – were designed for up to 2,100 students. Some of these school sites have enough land remaining to provide flexibility for the possibility of future expansion, but common spaces in the school, such as the hallways, cafeteria, library and more, were not designed to accommodate a significant increase in the number of students. Overcrowding can lead to numerous concerns for campus staff.

This is difficult to predict, as many external variables impact when Frisco ISD will reach what is considered full build-out. As of fall 2017, 80 percent of land in FISD was considered built-out, excluding parks, preserves, floodway and other undevelopable land or water bodies. Of the 20 percent left for future development, there are fairly specific zoning and future land uses prescribed. Student enrollment is expected to top out in Frisco ISD at around 83,000 students at full build-out. The latest demographic update from external demographer Population and Survey Analysts (P.A.S.A.) predicted enrollment would be 71,269 students in October 2025.

This is not likely to occur in Frisco ISD for many years, but FISD realizes that full build-out is coming eventually. Staff monitor enrollment trends in districts across Texas and the Dallas-Fort Worth area, in addition to FISD, to gain insight regarding growth and build-out.  The map below, created by external demographer Population and Survey Analysts (P.A.S.A.), shows enrollment changes across DFW over the last five years.

When or if Frisco ISD sees enrollment decline in certain schools and/or neighborhoods, the District has the ability to redraw attendance zones and redistribute students from one school to another to effectively utilize space. For example, the 2017 rezoning process impacted students at 26 schools, and established new attendance zones for the 2018-19 school year.

Frisco ISD has also seen many districts repurpose underutilized schools for new or special programs. FISD is utilizing this strategy to more effectively utilize space at Bright Elementary, now Bright Academy, which offers unique academic programs such as the International Baccalaureate (IB) Primary Years Programme, Project Lead the Way (PLTW) Launch and Spanish language enrichment. Starting in the 2019-20 school year, Frisco High School will also begin to serve students from across the District interested in the International Baccalaureate (IB) Diploma Programme (DP).

The bond program would provide funds to replace and update most technology on a five-year rotation schedule, with Apple iOS devices replaced on a three-year rotation. In addition, it would enable the District to purchase additional electronic devices to provide one device for every student. This would break down to more than 100,000 new devices through 2026 including 18,890 desktops/laptop computers, 54,745 Chromebooks and 25,920 iPads, plus printers, projectors/flat screen televisions, document cameras, charging charts and wireless routers.

The current ratio of students to computers or mobile devices varies by level and campus. Many schools and campus PTAs have purchased technology over the years to supplement the allotment provided using District technology funds. This has resulted in some disparity between campuses with regard to the amount of technology available for students and teachers to use. The bond proposition would allow for additional student access to technology.

A 1,250 seat auditorium and gallery space would feature the talent of FISD students and allow for collaborative events between multiple campuses and fine arts programs. Many performances currently fill up the 500-600 seat capacity of high school auditoriums. A larger venue would allow more family and friends to experience student concerts, plays and art shows.

The proposed auditorium would also reduce the number of events currently hosted in high school auditoriums, freeing up those venues for more elementary school, middle school and community performances. High school auditoriums currently host many large competitions that impact instructional time for fine arts students. A separate, larger auditorium would reduce this loss of instructional time and save time and the costs associated with traveling out of District for competitions.

The venue would also provide instructional, training and office space that would be used by the District and could be shared with public and private partners and/or community groups.

Frisco ISD continues to explore opportunities to partner with outside entities on a performing arts center that could be used by FISD students and staff. One of the proposed bond projects is a 1,250-seat auditorium for the performing and visual arts. The District anticipates it would use the proposed auditorium approximately 150-170 days per year, including days, evenings and weekends. The months of June, July, August and September would present the most opportunities for outside or collaborative events. While the bond program would provide funding for FISD to build its own auditorium, the District would continue to explore and evaluate partnership opportunities before constructing a facility.

While all of the District’s bonds are 30-year bonds, some of the assets FISD purchases, such as technology and vehicles, have shorter lives. Therefore, each time the District sells bonds, leaders ensure that at least 1/3 of the principal is paid off in the first 10 years to account for the shorter-lived assets that have been purchased. Moving forward, the District is exploring options to issue shorter-term debt for shorter-lived assets, while continuing to issue 30-year bonds for school buildings.

Frisco ISD must get approval from voters in order to raise the maintenance and operations (M&O) tax rate above $1.04 per $100 valuation. The election is called a Tax Ratification Election, or TRE, because it is an election that asks voters whether to ratify the higher tax rate adopted by the Board of Trustees.

When the FISD Board of Trustees called for a 13-cent tax increase in spring 2016, the school district was still experiencing growth at a rate of 3,500 to 3,700 new students each year. The rate of growth has slowed down since that time. FISD added approximately 2,600 students each year between October 2015 and October 2017. The District is projected to continue to add students, but at a slightly slower rate than the past, which further slows the District’s building program.

Fewer new students allowed FISD to accommodate some of the enrollment growth in existing schools. The District took a close look at attendance zones in fall 2017 to utilize existing school capacity and made changes that impacted 26 schools.

At the same time, taxable values in Frisco ISD increased by approximately 16 percent each year from 2015 to 2017. Property value growth directly benefits the interest and sinking (I&S) fund, so when property value growth outpaces student enrollment growth and building needs, capacity is created within the debt service fund.

In addition, thanks to low interest rates, FISD borrowed funds authorized through the 2014 bond program at lower rates than were anticipated in 2016, saving interest over the long term and creating additional capacity in the debt fund. From 2015 to 2017, FISD paid off $11,790,000 in bonds and refinanced $475,570,000 of existing debt, saving taxpayers $132,991,201 in interest over the life of the bonds. Since 2007, the District’s debt refinancing activities have saved over $180 million in interest costs.

All of these factors – some that FISD controlled and some that were out of FISD’s control – gave Frisco ISD the capacity to lower the I&S tax rate.

Frisco ISD has engaged the community in the planning and decision-making process over the last two years through a series of committees designed to both provide feedback and develop ideas. This input and feedback has helped the District prioritize spending and make investments in certain areas, such as staff salaries and safety and security, based on stakeholder recommendations.

Parents, employees and community members played a key role in the priorities-based budget process that identified nearly 60 strategies to reduce and/or reprioritize costs and generate additional revenue in the 2017-18 school year. The School Board also made the decision to delay the opening of four new schools to save operational costs.

Frisco ISD is a Chapter 41, or property-wealthy school district, under Texas Education Code. Over the years, the school district has paid varying amounts in recapture to assist with the financing of public education across the state. In recent years, FISD has not paid any recapture.

The amount of recapture paid each year is based on the relative wealth of the school district, which is measured in terms of the taxable value of property that lies within the school district borders divided by the number of students in weighted average daily attendance (WADA). When student enrollment growth outpaces property value growth, recapture is reduced. Recently, Frisco ISD’s property value growth has outpaced student enrollment growth. If that trend continues, the District will start paying recapture again in increasing amounts regardless of the tax rate.

A maintenance and operations (M&O) tax rate of $1.17 would send FISD into recapture one year earlier than what is otherwise projected. In 2018-19, that would mean approximately $14 million of the $46 million generated by the TRE would be sent to the state in recapture, leaving a net increase in revenue of approximately $32 million.

These fees, which were implemented starting in the 2017-18 school year, were recommended to the District in lieu of budget cuts following the failure of the 2016 Tax Ratification Election. A committee of stakeholders met with District leaders over the course of several months during the 2016-17 school year to develop strategies for saving money and generating additional revenue. The process was intended to ensure the District and community were on the same page regarding spending and parent and taxpayer expectations.

The athletics fee was developed because the committee identified that Frisco ISD spends more on athletics than most of its peer districts. Committee members also noted a disparity between athletics and fine arts in terms of the costs passed on to parents. Rather than recommend reductions to athletic spending or programming, the committee opted to recommend the fee as a way to offset some of the costs incurred by the District. In the future, FISD will revisit that recommendation with the Long-Range Planning Committee and solicit feedback before making a recommendation to either keep or remove the fee. Input from all parents and community members would be considered.

Another recommendation made during the Priorities-Based Budget process was to pass on the cost of transaction processing fees to parents who use My Payments Plus. Frisco ISD had previously been absorbing that cost. This change was implemented as a cost-savings measure and has allowed the District to allocate funds to higher-priority areas.

If ratified by voters, the higher maintenance and operations (M&O) tax rate would generate approximately $32 million in additional operating revenue for FISD in 2018-19, after paying recapture. 

State law requires very specific language be used on the ballot. $1.57 is the total tax rate adopted by the School Board before factoring in the resolution that would lower the debt tax rate after the election. This resolution requires a series of steps to occur before landing at the final 2018 tax rate of $1.44:

• Step 1: Determine the school district’s rollback tax rate using the Comptroller’s Tax Rate Calculation Worksheet. FISD’s rollback tax rate is $1.44.

• Step 2: Determine any increase in the M&O tax rate. The Board has recommended a $0.13 increase in the M&O rate.

• Step 3: Adopt a tax rate equal to the recommended M&O tax rate plus the rollback tax rate. For FISD, the sum of those two rates is $1.57. This is the amount on the ballot. However, the Board has approved a resolution to offset the $0.13 M&O increase with a $0.13 I&S decrease.

• Step 4: Hold a Tax Ratification Election asking voters whether to ratify the $0.13 M&O increase.

• Step 5: If the TRE passes, enact the resolution to reduce the I&S tax rate by $0.13, bringing the total tax rate back down to $1.44.

The total 2018 tax rate will be $1.44 per $100 valuation. That is two cents lower than the total 2017 tax rate of $1.46 per $100 valuation and will reduce the number used to calculate a property owner’s tax bill.

The ballot language does not mean that Frisco ISD intends to raise the total tax rate to $1.57 in the future. 

Maintenance and operations funds pay for the day-to-day expenses of the school district, including staff salaries, utilities, supplies and more. The vast majority, or 83 percent of funds appropriated in the 2018-19 budget, goes toward payroll. See a breakdown of spending on the Financial Transparency website.

The chart below is a comparison of peer pupil expenditures in Frisco ISD relative to three groups: similar districts, fast growth districts and the 20 largest school districts in the state. Spending in FISD is below the average of all three groups in most areas.

One recommendation made by the Facilities and Programs Evaluation Committee was to reduce staffing ratios to 22:1 for grades K-4, 25:1 for grade 5 and 26:1 for grades 6-12 for most courses. The chart below compares current staffing ratios to proposed staffing ratios.

Staffing ratios are not the same as class sizes, which are typically lower, but they serve as a guideline for hiring that impacts class size. Hiring decisions have a significant impact on the operating budget since more than 80 percent of expenditures go toward payroll.

To save the costs associated with hiring more teachers, Frisco ISD has allowed class sizes to rise in recent years. The charts below show the total number of classrooms above a 22:1 student-to-teacher ratio in grades K-4 and at or above a 30:1 student-to-teacher ratio in grades 6-12.

District leaders would work with members of the Long-Range Planning Committee to prioritize the list of operating recommendations, including the proposal to implement alternative scheduling options at the middle school level. Additional funds would provide FISD with the flexibility to hire more middle school teachers to accommodate a different bell schedule. 

Block scheduling does not have to mean rotating A and B days with four double-blocked courses each day, like the schedule at Frisco ISD high schools. FISD would research a variety of different options and weigh input from middle school principals, teachers, parents, students and other stakeholders before implementing any changes to the current eight-period school day. Any changes would be designed to address:

• Interdisciplinary learning

• Flexibility of instructional time

• Time for student/teacher interaction

• Transition from 5th to 6th grade and 8th to 9th grade

• Planning time for teachers

• Extracurricular activities