Higher property values will likely cancel out tax cuts
More money for teacher pay also discussed during SSISD's first budget workshop
Faith Huffman | News-Telegram News Editor

Aug. 1, 2006 -- Pay increases for Sulphur Springs Independent School District teachers was the primary focal point of Monday night's budget workshop, one of three slated to firm up the 2006-2007 fiscal budget.

SSISD Director of Finance Miki Eddins also explained the way the primary budget is compiled, how recent legislation affects the tax rate, and how that will impact local and state revenues.

Preliminary figures presented to the board at the beginning of Monday night's special called session indicate that the budget is expected to come out in the black with the overall budget balancing.

Taxpayers can expect the maintenance and operation portion of the school tax rate to drop over the next two years, based on the formula established by legislators in House Bill 1 to get M&O tax rates down to $1.264. M&O is used to cover basic operating costs such as payroll, utilities, transportation and supplies, whereas the interest and sinking tax rate pays for voter-approved debts.

SSISD taxes should go down more than in most school districts. Eddins said many in the state were already at the $1.50 rate cap, and their rates should go down to $1.33 per $100 of property valuation. 

"Sulphur Springs ISD's current M&O tax rate was only $1.425," Eddins explained to board members. "In cases like ours, we multiply our existing tax rate by 88.67 percent, which will reduce our tax rate to $1.264."

House Bill 1 then allows districts to add a 4-cent increase to enrich and maintain programs, Eddins said. 

"If the SSISD board approves the 4 cent increase, which they most likely will, the SSISD 2006-2007 tax rate for M&O would be $1.304, twelve cents less than the current rate."

The interest and sinking fund tax rate is currently $0.079, and is expected to increase in fiscal year 200602007 by 3 cents to cover debt payments which are expected to increase. Overall, the tax rate, including both M&O and I&S, is expected to be $1.413 per $100 of assessed property value in the new fiscal year. That's down from the overall $1.50465 last year, or a decrease of 9.165 cents per $100 of property value.

In other words, the owner of a $100,000 home paid $1,504.65 in school taxes last year. This year, a $100,000 home would only warrant a tax payment of $1,413. (Note: These figures do not take into account homestead or other exemptions.)

Of course, the increase in appraisal rates over the past year could still mean steep payments, as a home once valued at $100,000 likely received a higher appraisal value this year, which would increase the tax payment. In essence, while the tax rate is dropping, appraisal values are up so tax payments could be more costly or near the same value during fiscal year 2006-2007.

"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," Eddins also noted.

Eddins said that the district will receive a significant amount of funding from the state, however, for high school college preparatory efforts, as well as funds to help offset employee health care costs and state established teacher pay increases.

Board members have asked  finance officers and administrators to refigure the budget, looking for areas in which one-time projects initially approved could be cut in order to provide more funding to increase teacher pay. Currently, all contract or salaried professional employees receive "step" raises annually through 20 years in accordance with the policy established a few years ago. Also, financial officials recommended increasing hourly employees' pay by 50 cents an hour. 

Overall, the district anticipates ending fiscal year 2005-2006 with about $4 million left in the general operating fund. In the coming year, initial projections show expenditures will total $26,733,451 while the district anticipates taking in $27,167,861 in revenues.

Teacher, professional and employee pay increases are expected to be taken out of the $434,410 left in reserve after expenses are subtracted from this year's revenues. That still leaves a healthy $4 million fund balance, which auditors advise needs to be large enough to cover two to three months' worth operations without any additional funding added to it.

"They're deserving and the kids are deserving of quality teachers," board member Foy Williams said. "I'm concerned if we can attract the best teachers if we don't [approve a significant pay increase.]"

"It's good to have continuity," board member Jacqueline Brice said. "I think we'll lose more teachers in the future if we don't go in the right direction now.

"The issue here is how much we can dig in and give above and beyond to show [teachers] good faith," Carolyn Thomas surmised. "What if we shoot for $300 instead of $500, a $300 to $325 increase?"

In other money matters Monday, school officials approved the Baucom/Premier plan for student accident insurance. Baucom Insurance submitted two estimates, one for increased rates on the current plan, and the premier package, which will cost $53,769 and will reduce surgery coverage from 90 percent to 75 percent. To continue under the policy used in 2005-2006, the cost would jump from $45,994 to $59,344 for student accident insurance.

UIL requires the district to carry the insurance, which will also include injuries which might occur during a field trip. Trustees unanimously approved Baucom/Premier, with Brice abstaining.

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