1 Chapter 41: Headed Towards the Wall of Recapture Presented by - PowerPoint PPT Presentation

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Chapter 41: Headed Towards the Wall of Recapture Presented by Dr. James Terry Chief Financial Officer Finance and Accounting Services Division 2

What is a Wealthy District?  The Texas Education Code requires school districts that are property wealthy (Chapter 41) to share their wealth with school districts that are property poor.*  The Texas school finance system "recaptures" funds from the property-wealthy districts to distribute to the property-poor districts (i.e. “Robin Hood”)  Accordingly, if a district’s wealth per student “wealth per average daily attendance” (WADA), exceeds the “equalized wealth level” (EWL), it will be subject to recapture. *5 Options: consolidation with another district, detach property, purchase attendance credits from state, educate nonresident students from partner district, and consolidate tax bases with another district 3 Source: TEA website Chapter 41 Wealth Equalization

Austin is considered a Wealthy District Austin ISD M&O Tax Rate for 2015-2016 is $1.079 4

Equalized Wealth Levels  A school district whose property wealth per WADA exceeds $514,000 (EWL 1) for the first 100 pennies ($1.00) must send additional tax collections to the State (recapture option 3).  Dallas ISD’s current wealth per WADA is $433,057 5 Source: TEA website Chapter 41 Wealth Equalization and Chapter 41 Status Letter

Hitting the Wall Wealth per WADA $800,000 $694,720 $700,000 $646,312 $595,610 $600,000 $552,709 $504,366 $514,000 EWL 1 $500,000 $433,057 $407,185 $389,604 $379,688 $400,000 $366,223 $362,349 $300,000 $200,000 $100,000 $- 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 Wealth / WADA 6

Dallas ISD’s Projected Recapture M&O Tax Collections Subject to Recapture 1,600 1,389 1,400 1,293 1,191 1,200 1,105 1,009 1,000 866 Millions 800 600 26.0% 20.5% 361 400 13.7% 265 7.0% 163 200 77 - - - 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 M&O Collections Chapter 41 Payments 7

Maintenance & Operation (M&O) Tax Dallas ISD’s M&O tax rate is currently capped at $1.04 and has been  at this level for 10 years.  Current school finance legislation includes no consideration for inflation or economic changes.  Supreme Court has ruled against School District’s challenge of inadequate funding, however the Supreme Court did recognize the funding levels to be inadequate. The likelihood of additional state aide is minuscule at this point. 8

Dallas ISD Tax Rate vs Consumer Price Index (CPI) 250 240 230 220 210 M&O Tax Rate $1.04 200 190 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 CPI CPI has increased 15.4% since 2007, while the District’s tax rate has remained static at $1.04 9

The Pressure for Increased Funding  Additional pennies will be needed: ◦ Expand Early Childhood Education ◦ Career and Tech Education ◦ Strategic Compensation ◦ Rewarding effective teachers ◦ Teacher Excellence Initiative ◦ Ace Program ◦ Expand Choice School Programs: ◦ Early College High Schools ◦ Dual Language Programs ◦ IB, Montessori, and Personalized Learning 10

And Dallas ISD’s student population require additional resources & support African Economically English District Enrollment American Latino White Disadvantaged Learner Houston 214,462 25% 62% 8% 76% 30% Dallas 160,148 23% 70% 5% 86% 42% Fort Worth 85,695 23% 63% 11% 74% 31% Austin 84,191 8% 60% 26% 60% 28% Aldine 69,553 25% 71% 2% 82% 34% El Paso 60,556 4% 83% 10% 68% 26% San Antonio 53,701 6% 91% 2% 92% 19% Ysleta ISD 42,421 2% 94% 4% 81% 25% Corpus Christi 38,675 4% 79% 14% 67% 5% 809,402 21% 21% 5% 20% 20% TUC (% of state) Texas 5,215,282 13% 52% 29% 59% 18% *Source: Texas Academic Performance Report 2014-15. 11

Dallas County ISDs Tax Rates ISD Name M&O Tax Rate I&S Tax Rate Total Tax Rate $ 1.1700 $ 0.4250 $ 1.5950 Grand Prairie Independent School District DeSoto Independent School District $ 1.1700 $ 0.2900 $ 1.4600 Coppell Independent School District $ 1.1700 $ 0.2690 $ 1.4390 $ 1.0400 $ 0.5000 $ 1.5400 Lancaster Independent School District Duncanville Independent School District $ 1.0400 $ 0.4895 $ 1.5295 Cedar Hill Independent School District $ 1.0400 $ 0.4850 $ 1.5250 $ 1.0400 $ 0.4050 $ 1.4450 Irving Independent School District Mesquite Independent School District $ 1.0400 $ 0.3700 $ 1.4100 Ferris Independent School District $ 1.0400 $ 0.3150 $ 1.3550 $ 1.0400 $ 0.3133 $ 1.3533 Garland Independent School District $ 1.0401 $ 0.3000 $ 1.3401 Richardson Independent School District Grapevine-Colleyville Independent School District $ 1.0400 $ 0.2801 $ 1.3201 Dallas Independent School District $ 1.0401 $ 0.2420 $ 1.2821 $ 1.0400 $ 0.2417 $ 1.2817 Carrollton-Farmers Branch Independent School District Sunnyvale Independent School District $ 1.0240 $ 0.3860 $ 1.4100 Highland Park Independent School District $ 1.0267 $ 0.0852 $ 1.1119 Note: 483 of 1556 Texas ISDs have set $1.17 tax rate 12 Source: 2015 Tax Rates and Levies - Texas Comptroller of Public Accounts

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