Little Elm ISD Long-Range Facilities Planning Committee Meeting 2: Monday, April 10, 2017 Zellars Center for Learning & Leadership 300 Lobo Lane Little Elm, TX 75068
AGENDA • Welcome, Meeting 1 Recap & Website Review • How School Finance Works & LEISD Financial Review • Bonding Capacity & Tax Impact Scenarios • Demographic Projections • Small Group Exercise • Large Group Share Out • Closing
LRFPC WEBSITE www.LittleElmISDPlanning.net
HOW SCHOOL FINANCE WORKS & LEISD FINANCIAL OVERVIEW
SCHOOL FINANCE: THE BIG PICTURE A school district’s budget is Revenue Sources generated from three general FEDERAL sources: STATE Federal • Federal funding LOCAL State • State funding Local • Local tax effort
FEDERAL FUNDING • Appropriated for special programs or to Revenue Sources provide services to a specific group of FEDERAL 2% students • Cannot be used to supplant state or local Federal dollars to fund a program State • About half of federal funds go directly to Local school districts while the remainder goes to the state or to regional service centers
STATE FUNDING Foundation School Program Revenue Sources 39.2% • Provides state funding to school districts FEDERAL • Administered by TEA STATE Federal • Meant to ensure that all school districts, regardless of property wealth, receive State "substantially equal access to similar revenue Local per student at similar tax effort, considering all state and local tax revenues of districts after acknowledging all legitimate student and district cost differences.”
STATE FUNDING State funding system is VERY COMPLICATED Revenue Sources FEDERAL The simplest explanation: • Each district receives a different level of STATE funding Federal • Basic funding levels are primarily established State by looking at “wealth per student” Local • Tax base divided by number of students • Lower “wealth per student” = more state funding • Higher “wealth per student” = less state funding
LOCAL TAX EFFORT • Generated from property taxes (not Revenue Sources 58.8% sales taxes) FEDERAL • Called “ad valorem” taxes Federal • Each year, a school district adopts two State LOCAL tax rates, which determine the total tax Local rate: • Maintenance & Operations (M&O) • Interest & Sinking (I&S – aka debt service)
MAINTENANCE & OPERATIONS (M&O) TAX RATE Funds the day-to-day maintenance and For the average citizen operations of the district FEDERAL this is similar to: • Salaries (for teachers and other staff) ✓ House repairs • Facility repairs and maintenance ✓ Car fuel • Contracted services ✓ Routine services LOCAL • Bus repairs, maintenance and fuel ✓ Groceries • Food services ✓ Cleaning supplies • School supplies and materials ✓ Utilities • Utilities (electricity, water, etc.)
MAINTENANCE & OPERATIONS (M&O) BUDGET Source of 2016-2017 % $ Per Student Revenue Proposed Budget (7,509 students) Local $36.2 58.8% $4,828 State $24.2 39.2% $3,218 Federal $1.3 2% $166 Total $61.7 100% $8,212
INTEREST & SINKING (I&S) TAX RATE Also referred to as Debt Service. Funds debt repayment for For the average citizen “big ticket” items FEDERAL this is similar to: • New building construction ✓ New home purchase ✓ House renovations • Existing building renovations ✓ Land for a home LOCAL • Land purchases ✓ New appliances • Program-specific equipment ✓ New home computer • Technology ✓ New car • School buses
LOCAL TAX EFFORT M&O I&S The Annual District Budget I&S funds may only be used to repay is passed by the debt. School Board of Trustees. 78 percent of the District’s M&O They cannot be used for salaries, budget goes to payroll. utilities or other day-to-day expenses .
LOCAL TAX EFFORT M&O I&S Capped at $1.04 per $100 Capped at $0.50 per $100 of property value of property value If a district wants to raise the rate Every cent requires voter beyond the cap, it can only go as high approval in a Bond Election. as $1.17; however, it requires voter approval through the holding of a Tax Ratification Election.
CURRENT LITTLE ELM ISD TAX RATE M&O I&S LEISD TOTAL TAX RATE TAX RATE TAX RATE $1.17* $0.37 $1.54 per $100 *The Little Elm ISD Board of Trustees called for a of property value TRE, which was held September 2015. Thirteen (For example: A home valued at pennies were moved from the I&S rate to the M&O $200,000 after any homestead/other side of the budget. This was to generate additional exemptions would have an annual funds for the ongoing M&O budget. LEISD tax of $3080)
LEISD TAX RATE HISTORY General Debt Service Fiscal Year Total Operating (M&O) (I&S) $0.436 $1.71 2002- 2003 $1.275 $0.50 $1.54 2009 - 2010 $1.04 $0.50 $1.54 2010 - 2011 $1.04 $0.50 $1.54 2011 - 2012 $1.04 $0.50 $1.54 2012 - 2013 $1.04 $0.50 $1.54 2013 - 2014 $1.04 $0.50 $1.54 2014 - 2015 $1.04 $0.50 $1.54 2015 - 2016 $1.04 2016 - 2017 $1.17 $0.37 $1.54
BONDING CAPACITY & TAX IMPACT SCENARIOS Derek Honea, RBC Capital Markets
Little Elm Independent School District Preliminary Bond Capacity Analysis April 10, 2017
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Table of Contents Section 1 Review of Existing Debt Section 2 Current Market Review Section 3 Preliminary Tax Rate Impact Analysis Section 4 Bond Election Timetable 2 RBC Capital Markets
Review of Existing Debt SECTION 1
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