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The Austin ISD board of trustees unanimously adopted its 2012–13 budget during its Aug. 28 meeting.
The board voted to keep its current tax rate, $1.242 per $100 of property valuation. Doing so meant that the board would not ask voters to consider a tax ratification election, or TRE, this November.
“This was not our year but next year will be our year so we need to get out in front of that and claim some dates quickly,” board President Mark Williams said of proposing a TRE.
The 2012–13 budget projects $979.5 million for expenditures and other uses, and $950.5 million for revenue and other sources.
The district plans to pay for the roughly $29 million shortfall with transfers from reserves.
Included in the budget is an expense giving all regular, full- and part-time staff the equivalent of a 3 percent raise for one year—a $14.16 million expense.
During the Aug. 28 meeting, board Vice President Vincent Torres and trustee Sam Guzman voiced support for the expenditure.
Trustee Robert Schneider said the district should pay staff more in order to stay competitive with other school districts.
Trustee Lori Moya advocated for an increase in the hourly rate for hourly employees in a future TRE.
During public comment, Education Austin President Ken Zarifis said that there was a positive attitude among the staff because of assurances that the district would not pursue reductions in force or financial exigency this year, as well as the promise of the 3 percent raise.
"What a difference a year makes," he said.
TRE and reasoning
The district had been considering holding a TRE in either 2012 or 2013 in order to support existing programs, follow up on stated priorities such as full-day prekindergarten and make the one-time 3 percent raise for staff permanent.
The district's deadline to decide whether to place a TRE on the ballot was Aug. 28, but the decision was effectively made two weeks earlier when it published a legal notice announcing that it would keep the tax rate flat, Williams said.
Government entities such as cities and counties have the ability to raise their tax rates up to what is called the rollback tax rate—the tax rate that would produce the same amount of money the entity spent the previous year, plus a slight increase—without voter approval.
School districts have a rollback rate of zero. Voters must approve any tax increase, Williams said.
By publishing a notice that the tax rate would stay the same at $1.242 per $100 of property valuation, the district effectively took action not to consider the election for this year.
Williams cited several reasons why he felt the district did not pursue the TRE in 2012.
He said the district correctly predicted that the Travis County Healthcare District, Central Health, would move forward with its TRE this year. Central Health is asking voters to consider a 5 cent tax rate increase—from 7.8956 cents to 12.9 cents per $100 of property valuation—which would help pay for a number of regional health care improvements.
The City of Austin had “claimed” 2012 as the year it would put forth its bond proposals, he said. This year, voters will consider seven propositions totaling $385 million of bond money for roads, parks and buildings, among other projects.
He said the district was sympathetic to the taxpayer and other governmental entities, and did not want to ask the taxpayer for too many projects in any one year.
He said that the district wanted to delay asking for more money because it did not know what the funding situation will look like in the future.
Tax rates are made up of two parts: maintenance and operations (M&O) and interest and sinking (I&S). The two rates were $1.079 and $0.163 per $100 of valuation, respectively. They combine to total the current tax rate of $1.242 per $100 of property valuation.
According to state law, school districts must hold TREs to raise their M&O rates above $1.04 per $100 of property valuation. AISD held a successful TRE in 2008 and raised its M&O rate to $1.079 per $100 of valuation.
The maximum M&O rate a Texas school district is allowed to have is $1.17. A district cannot go higher than that for any reason, Williams said. Raising the tax rate means there is less wiggle room in the future.
Williams said he was personally uncomfortable waiting until 2013 for the election because no one knows what will happen with the next legislative session and pending school finance lawsuits. The last legislative session resulted in roughly $58 million in funding cuts across two years.
He noted that this year, the district had to fund a roughly $29 million shortfall out of reserves.
He said he did not want to have to go back to taxpayers and ask for an additional increase in a few years because of unforeseen financial shortfalls because of further cuts.
"We hope that 2013 will be for schoolchildren, the way that health and city projects will be this year," he said.