A Message from Dr. Greg Smith
July 24, 2008
Dear Members of the Community,
At a time when the economy needs an infusion of well-prepared young people to enter careers or higher education, the public school funding formula fails to provide school districts adequate funding to meet the educational and social support needs of our future leaders. Although our valued legislators certainly did not intend for this to happen when they passed House Bill 1 in 2006, school districts are now faced with tough decisions on how to make ends meet while simultaneously enhancing the education experience of our children. Each school district in our area has a different story of impact. I would like to offer you fact-based information on how House Bill 1 is adversely affecting Clear Creek Independent School District, and our efforts to inform the community we serve and work in concert with our local state representatives toward a resolution.
House Bill 1 reduced local school property taxes by 1/3 over a two year period and compensated districts for the loss in local tax revenue by expanding the Business Franchise Tax and adding several new taxes. As an aside, the new business franchise tax is now creating extreme hardships on small businesses in our area prompting them to petition for a recall. What did House Bill 1 (HB1) do to Clear Creek ISD and its taxpaying community?
- There are two components of local school property taxes; maintenance and operations (M&O) and debt service. HB1 only dealt with local M&O tax efforts. It reduced the school district M&O property tax rate, which is what we use for payroll, supplies and materials, contracted services, and capital outlay, from $1.50 to $1.00 per $100 valuation over the last two years.
On the debt service side, homeowners in Clear Creek ISD pay $0.32 in school taxes per $100 valuation. Tax revenue generated from the debt service tax rate can only be used for taxpayer authorized approved bond programs that provide funds for major capital expenditures. This includes building new schools, major building renovations, significant maintenance needs, purchasing land for school facilities, and purchasing buses.
- HB1 froze the level of funding we receive per student at 2006 levels; meaning even though students’ needs, inflation, and state mandates have increased, we receive the same amount per student as we did in 2006. Clear Creek ISD receives roughly $5,365 per student annually. Since our funding level is essentially frozen at the 2006 level, inflationary costs associated with pay raises for teachers, fuel, energy, and other highly volatile expenses such as property and casualty insurance are not included in the current state funding formulas. Below is a list of strictly additional costs associated with inflation:
Electricity: $2,000,000 above what was budgeted last year
Fuel: $1,240,000 above what was budgeted last year
Natural Gas: $50,000 above what was budgeted last year
- Clear Creek ISD no longer receives the tax revenue generated from property value growth. Additional tax revenue generated from property value growth in our area goes to the State and not to Clear Creek ISD. The school funding system prior to the 2006 Legislative session allowed school districts to hold onto that revenue from local property growth for one year before the State decreased its share. This one year holdover helped fast growth school districts such as Clear Creek ISD to pay for additional staff and operations of new schools.
- HB1 capped the tax rate increase school districts can receive to 17 cents. Four of those pennies can be used at the discretion of the School Board. Each of those pennies for CCISD is valued at roughly $2.3 Million. The other 13 cents require what is known as a “roll-back election” where the school board approves a budget first and then asks voters for approval through an election. If the additional pennies are not approved by voters, school districts will need to cut their budget or reduce fund balance in order to keep the budget balanced. Eighty eight percent (88%) of CCISD’s budget is personnel related.
Through advanced planning and fiscal responsibility, Clear Creek ISD has managed to work within the current funding system over the past two years and is one of only 14 districts in Texas that has not taken all or part of those four discretionary pennies. Unfortunately, that is no longer a viable option. We are recommending to the Board of Trustees to take the 4 pennies to balance the budget for next year. We have deferred new positions and reduced our operating budget as best as we possibly can without affecting student services. The Board will meet on Monday, July 28, 2008 to discuss the budget. If the Board moves forward, a public hearing on the proposed budget will be held on August 25, 2008.
We are meeting with our local legislators in the next two weeks to help them better understand the ill-effects of House Bill 1 and we will be hosting four informational meetings in October for our community. If you should have any questions on how the public school funding formula is affecting our schools, please do not hesitate to call us at 281.284.0020 or visit our website at www.ccisd.net for information.
Greg Smith, PhD
Clear Creek Independent School District Superintendent of Schools