School Board considers Voter Approval Tax Rate Election
After increasing staff salaries recently and leaving the projected budget at a deficit, the San Marcos Consolidated Independent School District Board of Trustees floated the idea of holding a Voter Approval Tax Rate Election to increase the revenue for the district. The board held a discussion on the projected revenue that could come from a VATRE, the timeline for doing so and the necessary machinations at the special called meeting Monday.
SMCISD Business and Finance Executive Director Michael Doyle gave a presentation to explain what a Voter Approval Tax Rate Election would entail, including the timeline and the financial benefits. Doyle said a VATRE is an election required by the state that asks voters to consider approving a modified tax rate to increase revenue for student programs as well as teacher and staff salaries. He added that, pursuant to the Texas Tax Code, the maximum rate districts can adopt without a VATRE is the district’s Maximum Tier One Compressed Rate, which is calculated annually by the Texas Education Agency.
“We have to use our M&O tax rate - that is our [Maximum Compressed Rate] TEA will provide us based on our property values. If we want to increase that tax rate anyway, we would have to go out to the voters,” Doyle said. “Keep in mind that we already have six Golden Pennies above that MCR that have been adopted in the past, so what we have available is a total of two more, [which is] up to eight Golden Pennies and nine Copper Pennies on top of that. You have to get the Golden Pennies before you get the copper pennies.”
At Monday’s meeting, Doyle said that the school district has seen a decline in the total tax rate since 2019.
“This current year, our total tax rate that was adopted is 99.15 cents [per $100 of taxable property value], and it continues to decline,” Doyle said. “Those Golden Pennies are revenue beneficial in that they are not subject to recapture. Our district has moved out of the threat of recapture, particularly based upon the most recent change to Senate Bill 2. That $100,000 homestead exemption has pushed us further away from it. But if we were ever to move into recapture, that revenue that’s generated off of additional Golden Pennies is not subject to recapture.”
Doyle based his data off of estimated property values, because the certified values will not be released until July 25. For 2024, the data showed that the Maintenance and Operation tax rate is $0.6802. The Interest and Sinking tax rate is $0.3113, which makes the total tax rate for 2024 $0.9915 per $100 of taxable property value. The projected 2025 M&O tax rate is $0.6769. The projected 2025 I&S tax rate is $0.2906, which makes the total 2025 projected tax rate $0.9675. Doyle also showed the projections for an additional Golden Penny and two additional Golden Pennies. With one additional Golden Penny, Doyle said the M&O rate is $0.6869, I&S rate is $0.2906, and the total is $0.9775. With two additional Golden Pennies, M&O is $0.6969, I&S is $0.2906 and the total is $0.9875. So the total tax rate with no additional Golden Pennies is $0.9675, with one additional GP is $0.9775 and two additional GPs is $0.9875.
“Looking at next year though, the floor [Maximum Compressed Rate] set by the …TEA is that $0.6169,” Doyle said. “If you were to add one Golden Penny, you’d add one cent to the total tax rate. … Based on the data that we have right now, you can see that with the additional two golden pennies, we are actually projecting to be lower than the current tax rate.”
Doyle described the potential revenue earned from the Golden Pennies.
“If we were to adopt one Golden Penny, based on voter approval, we are estimating somewhere … [around] $1.38 million added to our revenue,” Doyle said. “If we were to pick up the second Golden Penny, for a total of eight, you can see that we’re looking at roughly $2.75 million.”
Doyle said that the timeline is critical, and the district’s 2024-2025 school year budget needs to be established by June 30. The board of trustees must select an auditor to conduct an efficiency audit by July 5. Districts going for a VATRE must adopt their tax rate by August 19, which will be based off of preliminary tax compression calculations. August 19 is also the last day to order an election. Efficiency audits must be completed and posted to the district website. Results must be discussed at an open meeting no later than October 5. The uniform election date for district’s holding a VATRE is November 5.
“If we were going to move forward with the VATRE, we’d have to add a resolution agenda item for our June board meeting,” Doyle said. “If the board were to have interest in calling this election, the first step would be selecting a company to provide that efficiency audit. That would need to be on the June 17 board meeting.”
SMCISD At-Large Board Member Miguel Arredondo said he’s interested in pursuing two Golden Pennies.
“I would like to see all $2.75 million, if approved, go to salary and benefits,” Arredondo said.
Doyle said if the district were to pursue two Golden Pennies in August, the money would not go to the district until April or May of the following year.
SMCISD Board President asked Doyle to clarify, if approved, the district would get the additional funds by the second half of the school year. He said that is true. Halsey requested the data on what type of increase would be possible at mid year if the entire $2.75 million were allocated to staff.
