Net funding to district won’t hit FISD budget too serverely

Many local seniors, upon opening their recent property tax statements, did a doubletake when they saw their school district tax liability would be zero dollars.

Senate Bill 2 was passed during the 88th Legislature’s second special session. The bill lowered, or “compressed,” the state’s property tax rate further from the original House Bill 3 law passed in 2019. Senate Bill 2 also allowed for the increase to the homestead exemption from $40,000 to $100,000, barring its passage by voters in November. (It passed by a huge margin.)

Between all of that, seniors — whose tax rates are frozen — went from paying a few thousand dollars in property taxes to the district to paying zero in the coming year.

“I was unaware of the impact of the frozen levy drop,” said Jill Minshew, FISD’s assistant superintendent for finance. “Our appraisal district warned us it could see a drop but at the time they were unable to give any kind of estimate or impact as it hadn’t yet been calculated.

“In the end, the combination of new and old tax laws caused the frozen levy to drop from about $10.5 million to $5.2 million for FISD.”

That accounts for less than 10% of FISD’s budgeted tax collections of $55.4 million.

But the state, with its recapture formula for property wealthy school districts, also takes another $26 million from FISD.

After SB2 passed, the district’s tax rate was finalized, its Maintenance and Operations tax rate dropped by 18.5 cents. Minshew said the budget adopted in June was based on a drop of only 8 cents.

Overall, the total net funding to the district — including tax collections and state funding, minus the recapture funds — hasn’t changed that much from what was budgeted.

Several factors played into the net funding formula — taxes collected, property value overall in the district, enrollment and attendance of students, demographics of the student population and other variables.

“As the year goes on, our projected revenue will change as our estimates become actuals in the various categories that affect funding,” she said.

Minshew said the current budget includes the updated enrollment, new tax rate factors and attendance projections, as well as the small amount of funds added during the legislative session for security requirements that were not known when the original budget was adopted.

“Overall we really didn’t have much positive or negative impact due to the reduction in the frozen levy or other changes to the tax laws,” Minshew said. “The district is still having to juggle increased costs on services, products and payroll, plus added requirements from the state with a mainly static budget from year to year.”

Minshew added the effects are mostly on its maintenance and operations budget. While the change also affected its debt-service budget, “it was small, so we’re still able to pay our bond debts timely.”

District support

“We’re grateful some of our older property owners are seeing relief in their property tax bills,” said FISD Supt. Joe Rodriguez.

Minshew and Rodriguez said persons who would like to donate some of that savings to assist teachers with classroom needs may do so through the Fredericksburg ISD Education Foundation, a nonprofit that supports students and staff.

“Another way to ‘donate’ is to give time through the FISD Academic Boosters, which helps with student mentor needs,” Minshew said. “Giving of time is just as important and valuable to our students.”