The General Operating Fund is a classification of school district dollars that includes revenues from local maintenance taxes, earnings from investments, participation and registration fees, co-curricular/athletic sales, and state revenues. Expenses from this fund include payroll of faculty and staff of the District, expenses directly related to student education, maintenance and operation of facilities, transportation of students, and other district operating expenses.
There are two sources of revenue for Friendswood ISD’s General Operating Fund (General Fund): local sources and state sources. FISD does not receive any federal revenues for the General Fund.
LOCAL SOURCES
Local sources account for over 56 percent of General Fund revenue and are comprised of Maintenance and Operating property taxes (94 percent), earnings from investments (2 percent), participation and registration fees (1 percent), co-curricular revenues (1 percent), and other miscellaneous sources (2 percent).
Maintenance and Operating Property Taxes: Residents of the Friendswood ISD school district are responsible for paying property taxes annually. The amount taxed to community members is made up of two figures: Maintenance and Operating Taxes (M&O) and Interest and Sinking Taxes (I&S).
2008-2009 FISD Tax Rate
M&O Rate: $1.04
I&S Rate: $. 327
Total FISD Tax Rate: $1.367
The only portion of tax dollars collected that can be used to fund the general operation of the school district is the M&O taxed amount. The I&S tax is reserved only for the use of re-payment of bond funds that are approved by voters – similar to a mortgage payment – and cannot be included in the General Fund.
In June 2006 during the third called session of the seventy ninth Legislature, House Bill 1 was adopted. Among other initiatives, this bill required all Texas school districts to compress their M&O tax rate to 88.67 percent of the 2005 rate for the 2006-2007 school year and 66.67 percent of the 2005 rate for the 2007-2008 school year and beyond. The only discretionary M&O tax revenue for a Texas school district is .04 cents that can be added to the compressed rate. Any M&O tax increase above $1.04 requires voter approval and cannot exceed an additional .13 cents.
What does this mean for Friendswood ISD?
2005-2006: $1.50 M&O Tax Rate
2006-2007: $1.50 x 88.67 percent = $1.33 + .04 pennies = $1.37 M&O Tax Rate
2007-2008 and Beyond: $1.50 x 66.67 percent = $1.00 + .04 pennies = $1.04 M&O Tax Rate
In Friendswood ISD, compressing the M&O tax rate from $1.50 to $1.04 means a reduction of over $8 million dollars for the 2008-2009 school year in General Fund revenues. In order for school districts to afford this tax cut for community members, the state had to supplement local district revenues by adopting a new funding method.
STATE SOURCES
Target Revenue: The new funding method adopted when House Bill 1 was implemented assigns each District a target revenue amount. This amount is used to calculate the total revenue a District can earn from local and state sources in a given year. Each school district in the state of Texas has a unique target revenue amount that drives the amount of state aide received in a school year.
This number is calculated and assigned by the Texas Education Agency based on an amount per Weighted Average Daily Attendance (WADA). WADA is determined by the number of students enrolled in the District, how often they attend classes, and what type of services they require. The target revenue calculation involves analyzing the 2005-2006 expenditures in the District and dividing by the calculated WADA in 2005-2006. Many factors are taken into account in this calculation, but once determined, this target revenue will not change until legal action takes place by the state.
Target Revenues in Our Area:
Alvin ISD: $5,212/WADA
Clear Creek ISD: $5,365/WADA
Dickinson: $4,959/WADA
Friendswood ISD: $4,929/WADA
Galveston ISD: $5,651/WADA
Pearland ISD: $4,903/WADA
Texas City ISD: $5,705/WADA
What does this mean for Friendswood ISD: In Friendswood ISD, property values are on the rise. Most of this increase is due to new businesses and families moving into our community. This growth enables the District to earn more Maintenance & Operating Tax Revenue, or local revenue. However, with the target revenue system in place, this increase in local revenue requires a decrease in state funding so the state mandated target revenue, or cap, for our District is not exceeded.
The only way for Friendswood ISD to earn additional revenue with our current system is when new students enroll and attend school in FISD, increasing the WADA. Each year since the implementation of House Bill 1, the state percentage of funding in the general fund decreases and the percentage of revenue from our local funds increases.
CHALLENGES FACING TEXAS SCHOOL DISTRICTS
With the new funding system in place, there is cause for financial concern for districts across the state. The target revenue, or revenue cap, is based on expenditures incurred during the 2005-2006 school year. Just as our community members have struggled individually to keep up with inflation, rising energy costs, and fuel increases, FISD is faced with these same challenges. There has been no increase to the target revenue to account for the changing economy and the increase in the cost to live and to do business.
Next in the series: School Spending 101: Where DOES that money go?
(Budget 101 was the first of this series and can be read at www.fisdk12.net (News: press releases) |
