TAX NEWS - 2010

Texas Tax: Frisco ISD Board members consider property tax increase

This week the Frisco ISD school board was presented a balanced budget to approve, but it will take a three cent increase on one part of the property tax rate and some efficient strategies to pull it off. The district is opening up six new schools this year and will be starting construction on a new administration building and classroom additions to Centennial High School.


Background

Months of planning goes into creating a budget for the next fiscal year, which is July 1 through June 30. The district receives some state and federal funding; however, more than half of its backing comes from two separate property tax rates. The first, a maintenance and operations tax rate (M&O), goes to pay general operations – salaries, utilities and supplies. The state cap for M&O is $1.04 per $100 assessed property value. Frisco currently has an M&O tax rate of $1 per $100 assessed property value and is not asking for a tax rate increase on M&O.

The second property tax rate, called interest and sinking (I&S) or debt service, currently sits at 39 cents per $100 assessed property value. The debt service tax rate has a cap based on the "50 cent test," meaning the I&S tax rate will never go over fifty cents. Board members are considering a three cent increase. If the board approves the adjustment, residents would pay a debt service of 42 cents per $100 assessed property value, bringing the total property taxes paid to the school district to $1.42 per $100 assessed property value.

For a house valued at $250,000, the three cent increase in I&S would mean an extra $75 in property taxes to the school district. This household would pay $3,550 in total property taxes to Frisco ISD at the proposed $1.42 tax rate.


Cost of new schools

Two elementary schools will open in 2010, rounding out the total to 30 elementary schools in Frisco ISD. They are being named for Gerald Sonntag and George and Debra Purefoy. There will be three middle schools, Cobb, Maus and Hunt middle schools, opening as well this year, meaning a total of 12 middle schools in the district. Lone Star High School will open with grade levels 9-11 this first school year and by 2011 will hold seniors as well. These new schools are being added because of the booming population in Frisco.

According to city manager George Purefoy, Frisco ISD is the fastest growing school district in the country, and recent census population estimates show Frisco as the fastest growing city in the nation. The revenue generated by the 3 cent property tax increase will completely go toward the debt payments of $79 million necessitated by the opening of the six new schools.

Assistant superintendent Richard Wilkinson said that part of the increases and decreases in property tax rates will depend on assessed property values, and that the budget reflects a prediction that there will be almost no growth in the value of Frisco homes.

"We think if we continue to build buildings, then the I&S rate will continue to increase a little, even if the assessed property values improve," Wilkinson said.

Shana Wortham, who handles communications and community relations for Frisco ISD, said the intention was always to bring a balanced budget forward for the board to approve, even if it took some work to get it there.

"We are utilizing even some of the reserve funds within that debt service account to help pay down, so we don't have to raise it any more than three cents," Wortham said.


Shaping the budget

The district has several strategies for saving money, like being more efficient rather than cutting programs or supplies.

"At the student level or the parent level…they just might notice classes are more consistently full," Wortham said. "We're just trying to make sure that we have good, full class sizes, because that utilizes your staff at the most optimum level."

Other money-saving tactics include cutting down on the utilities budget in worst-case-scenario areas, such as reserve funds for long periods of severe hot or cold weather. Next year's budget is based on short-term historical utility numbers, without considering drastic fluctuations.

"What we did is look strictly at the current use and current rates," Wilkinson said.

Most of the new schools will have motion detectors, so the lights will go off if the room is empty. Environmental groups on campus, such as Watt Watchers, also promote energy efficiency. The green teams are all voluntary.

Even with "scrubbing the budget" to be within reason, teachers and staff will still be getting a 2 percent raise off the midpoint. This means the raise is calculated using 2 percent of the average salary within a pay grade. The district is already in the process of hiring professionals and staff for 264 new positions that will be added for the next school year to meet growth.


Administration building

According to Wilkinson, construction on a new administration building located southwest of the CTE building will start July 1 and completion is expected Oct. 1, 2011. Construction alone for the building will cost around $24 million, and total costs including furnishing will increase the project's cost to $26.5 million. This building is being paid for with a $20 million no-interest bond, which will be sold in the next 30 days. A second bond will cover the rest.

The current administration building is needed for more classroom space by neighboring buildings. The Student Opportunity Center, an alternative school housed next to the current administration building, is looking for room to grow, as is Acker Elementary, which holds alternative programming for elementary and middle school students. Right now, the back hall of Acker is all administrative offices.

"That's the biggest thing – providing space for those programs to grow," Wortham said.


Centennial High School

After Lone Star High School opens this fall, Frisco ISD is hoping to hold off on adding a seventh high school right away. The solution is to build additions to current high schools, starting with Centennial High School. Classrooms on the north and south side of Centennial, which will house up to an additional 300 students, will be ready in the fall of 2011. With the extra space, the maximum enrollment at Centennial could be 2,100 students.

Building these additions now is a way for the district to save money. Room for an extra 300 students at each high school is the equivalent number of students that would be needed to open up the seventh high school. Each project at a high school costs about $6 million, whereas a new high school would cost around $80 - $100 million to build.

"It will give us some stability and time to see where the growth is, so that when we do make that decision (to open a new high school), we'll make the best decision for everybody," Wortham said.

Portables, which have been used in the past to add classrooms, do not add restrooms or eating space. These additions will have facilities and the capability to be used as extra lunch areas to relieve pressure on the main cafeteria.