(Seguin) — The Seguin ISD is taking the first steps towards potentially asking voters for some much needed financial relief.
The Seguin ISD Board of Trustees this week gave the go ahead for an audit that is required for district’s looking to ask voters for a tax rate increase using a Voter Approved Tax Rate Election.
As initially reported by the Seguin Daily News, the Seguin ISD faces an almost $4 million deficit.
District officials in May announced the lack of additional state dollars and the end of federal funds for COVID relief as the top contributing factors for the red ink in the upcoming budget.
Elizabeth Oaks, Seguin ISD Chief Financial Officer, is explaining the facts related to calling for the election in November.
Oaks explained the concept of obtaining what is commonly known as “golden pennies,” during Tuesday’s school board meeting.
She says these pennies are desperately needed as the district officially moves forward with a $103 million budget for the 2024-2025 fiscal year.
“Without getting too complicated, we are allowed to tax– the state sets our tax rate in August and that’s our maximum compressed tax rate and we add on our golden pennies and we are allowed to have up to eight and those golden pennies allow us to keep the tax collections from those golden pennies and then we also get additional state funding. It’s part of our Tier 2 state aid so to maximize your funding specifically for Seguin ISD, eight golden pennies would also bring more tax collections but it would also bring in even more state revenue. So, it would be an opportunity to maximum our state revenue and an opportunity to give raises to our staff and continue to give raises to our staff. It’s revenue that would not just only come in 2024-2025 but forever annually for the school district,” said Oaks.
Although it reads as a tax rate increase, Oaks explains why taxpayers’ wallets should not feel a direct impact from the extra pennies.
“It’s two cents so for about $100,000 worth of value, it’s about $20 a year. We will see tax rate compression in the 2024-2025 school year, so it’s a good year to do it because we are going to see the state force us to decrease our tax rate. So, people aren’t even going to necessarily see an increase to their taxes in the 24-25 year. If the tax rate compression is five cents, and we increase it to two, they are still going to get a compression of three,” said Oaks.
Oaks says House Bill 3 originally gave way for this compression of the tax rate — providing this opportunity for districts to find relief through the collection of these additional golden pennies.
“TEA (Texas Education Agency) decided that they were going to have all school districts compress their tax rate so what that means is local taxpayers pay less on their tax bills but school districts don’t lose that money, the state kicks in the difference. So, the state is sending us more money and local taxpayers are paying less but our funding is staying the same. According to our preliminary values, they should see a five cent reduction on the maintenance and operations side (M&O). So, if we were to pass the tax rate election, they would still see a three cent decrease. So, $30 for every $100,000 of value for a taxpayer according to preliminary values,” said Oaks.
District officials say they don’t expect the Seguin ISD to be the lone ranger in calling for a tax increase election this fall.
Oaks says many other school districts in Texas also find themselves in this same situation.
“I would tell the community to Google it and look at all the districts that have done it in the past couple of years with districts facing these huge deficits and the large amount of tax rate compression that the state has done, it’s an ideal time for districts to allow their taxpayers to see decreases in their tax bill but maximize the state funding for the school district,” said Oaks.
The newly adopted budget, according to Oaks only allows for the step raises for teachers.
She says this deficit includes no raises for the 2024-2025 fiscal year.
“With our current funding from our state, we are not able to sustain raises like Seguin has done historically and we have a legislative session. Hopefully, they will do something but we don’t know that. I wish I had a crystal ball. But again, this money is forever. It gives Seguin an opportunity to sustain operations long-term instead of hoping that the legislature does something,” said Oaks.
While the state funding system for schools can be difficult to understand, Oaks is hoping to engage the community with a better understanding of how it all works.
“We will do a lot of community education after we decide to call this tax rate election and I think it’s a great opportunity to educate our community on how school finance works and how important it is that people get their kids to school and they are here for when we take attendance and how that affects our funding,” said Oaks.
The school board on Tuesday officially approved the upcoming budget. It’s proposed tax rate won’t be set until August.