By JUDY SHERIDAN
After listening to some half-dozen residents in a public hearing Aug. 26, Aledo ISD trustees voted to adopt a FY 2013-14 budget projecting $50.8 million in expenditures, up 6.2 percent from the current year.
The budget is based on an enrollment growth of 2 percent and a 5 percent increase in appraisal values.
It includes 15 new staff positions, including two police officers, $1 million in teacher pay increases and two police vehicles.
Tax rate assumed, not adopted
The board did not set a tax rate, however, so school administrators say the revenue side of the budget is still open to amendment. At issue is what trustees will do about a $3.2-million gap between expected revenues and fixed debt payments, which administrators say could be closed by raising the tax rate 13 cents, withdrawing $3.2 million from reserves or some combination.
The adopted budget — called a compromise by superintendent Dr. Derek Citty — combines the two proposed solutions. It assumes a tax rate of $1.49 per $100 assessed value — 6.5 cents higher than this year’s — to generate most of $48.6 million in projected revenues. It also draws $1.6 million from a general fund reserve fund of more than $20 million.
If adopted the 6.48-cent rate increase would add $162 to the annual tax bill of the owner of a $250,000 home.
The rate is half the 13-cent increase published in a notice announcing the public hearing. The 13-cent hike would raise the annual tax bill for the owner of a $250,000 home by $300.
Town Hall meeting Trustees expect to set the official tax rate mid-month, after more dialogue with residents. A town hall meeting, advocated by trustee Bobby Rigues, has been set for 6:30 p.m. Tuesday, Sept. 10, in the board room of the administration building.
During the public hearing retired Navy captain Bob Wood urged trustees to consider the cumulative effect of all the taxing entities on taxpayers when adopting the tax rate, referencing this year’s higher property appraisals along with the possible 10 cents/$100 valuation to be assessed by Emergency Services District No. 1 for fire and emergency services.
“Individual homeowners in Aledo, specifically in the City of Aledo, could be facing as much as a $1,000 increase between all the taxing authorities,” he said. “At some point the taxpayers in the City of Aledo and Parker County are not going to be able to pay these bills. This is compounded, it’s cumulative, and it’s not in isolation.”
Willow Park Councilman Gene Martin, who said he was fighting to reduce the property tax rate in Willow Park, asked trustees to reverse the effects of the tax ratification election approved by voters in 2010. The election rearranged the tax rate, shifting tax dollars once earmarked for debt service to funding day-to-day school operations in order to compensate for state spending cuts. The shift has reduced debt service reserves over time to about $550,000, the minimum recommended by financial advisors.
“How much of the debt service fund should be paid by moving the 13 cents out of the M&O [school operations side] back to the I&S [debt service side] without raising the tax rate,” he asked. “You really need to consider that, because I don’t think very many of those 88 percent [of voters] doubted you when you said this would not cost anything. And apparently, it’s going to cost.”
Martin later confirmed, by asking another question, that each penny on the tax rate raises about $255,000 in revenue.
Tricia Haber, a financial adviser for Merrill Lynch and a former school board candidate, said she supported a tax rate increase “above and beyond.” She called district officials good financial stewards and said the district was fortunate to see its bond rating improve. “We are going to be coming up — in the next 24 months — on very volatile bond times; we want to keep that rating,” she said. “It will save us money. It will save us future taxes.”
Arlene Chapin said the district didn’t warrant additional money if it wasn’t going to be applied to reducing increasing class sizes. She said she didn’t understand the need for the tax increase in view of current and upcoming residential growth.
“If new people are coming in and paying taxes, the numbers to me don’t seem to match,” she said.
An Annetta resident asked if trustees planned to phase in the full 13-cent tax rate increase over the next two years to pay down the debt.
“Based on everything we know at this point in time, there would need to be some additional increase next year,” Chief Financial Officer Earl Husfeld said, “but the amount will be largely dependent on the certified values we get next July.”
Husfeld also fielded a question about future state funding.
“In the state’s eyes Aledo ISD is viewed as a property-wealthy district, and we send a portion of our tax collections to the state,” he said. “That’s one of the reasons we’ve talked about being very careful about how much money we use in the general fund to transfer back to the I&S (debt service) fund.
“We don’t know what the Supreme Court decision will be based on how the State of Texas funds public education. But everything now really is slanted against school districts like Aledo ISD, where we have more value per student. The lesser wealthy districts are getting a little bit bigger share of the state pie.”
After the public hearing concluded, trustee Johnny Campbell said he was still gathering information and undecided on the tax increase.
“We have an M&O (school operations) fund balance of over $21 million,” he said. “It used to be, not so distant in the past, that three months of operating expense was the optimal fund balance, and that’s just under $12 million. So, the difference between $12 million and $21 million is excess reserve if you compare it to the old standard.
“The problem is that we’re in this situation with the I&S (debt service]. “We were in the situation where we had that additional fund reserve, and we just used the additional reserves over a number of years to pay the difference between what we were collecting and what we were paying in debt service. M&O (school operations) is our last fund. If we burn up too much of that and some Chapter 41 thing happens that’s beyond our expectation, we get ourselves into trouble really quickly.”