<b>By Libby Cluett</b><br><a href="mailto:lcluett@mineralwellsindex.com">lcluett@mineralwellsindex.com</a>

SANTO – Santo ISD is asking taxpayers for more funds to run its schools through a tax ratification election.

An election asking voters for an additional 13 cents per $100 valuation for maintenance and operations is Oct. 3. If passed, the election will raise the M&O tax rate from $1.04 to $1.17 per $100 valuation. Combined with Interest and Sinking, or bond debt, the proposed SISD tax rate is $1.31. Early voting is under way.

According to SISD Superintendent Greg Gilbert, the district continues to demonstrate fiscal responsibility, including reducing expenditures in excess of $100,000 over the last two years. Yet, he added, SISD is one of the Texas school districts receiving the lowest funding per weighted student, called WADA, and the district continues to perform well academically at the state level.

“Santo ISD, like many schools in the state, is faced with the problem of increased operating costs in today’s economy with a 2005 revenue figure that was established and frozen in the 2007 legislative session under the state funding formula known as House Bill 1,” explained Gilbert.

In addition, the district seems to be in an especially tricky situation since they have to ask a community of voters for extra local funds in the midst of a poor economy and after the Palo Pinto Appraisal District raised taxable property values for those living in the district by about $18 million.

“Here’s the key, Santo ISD gains no new maintenance and operations money off of this $18 million increase. It only helps with interest and sinking [or bond debt],” Gilbert said.

He called it a “tough concept,” which goes back to House Bill 1, passed by the State Legislature in 2007, which, among other things, made public school districts compress their M&O tax rates each year from $1.54 down to $1.33 and eventually down to $1.04 per $100 valuation. The proposed $1.31 tax rate SISD is asking voters for this year is 38 cents lower than the 2005 tax rate, Gilbert said.

What HB 1 did to Santo ISD

Per HB 1 Texas public school districts operate under a fixed, state-mandated target revenue, which is based on dollars per weighted average daily attendance or WADA.

Santo ISD receives $4,712 per WADA, which ranks them in the bottom quarter of target revenue among Texas districts.

“It was circumstantial how you were assigned these target revenue dollars,” said Gilbert.

He said the state “took the amount of money you generate locally, [which they added to] state revenue and divided by a district’s average daily attendance.” He added that the target revenue was “based on 2005 or 2006 calculations – [which ever] paid you the best.”

“This was the one time in this world that a low attendance helped,” said Gilbert.

He said other things that could benefit districts at the time of the state’s snapshot could be a large payment by a delinquent taxpayer or a major surge in property values that year “that kicked up local revenue so that there were more dollars per student.”

The calculation was done one time, Gilbert said, and “was based on where you were that one time in space and you got the luck of the draw.”

Santo ISD has the second lowest per-weighted-student target revenue and ranks just above Strawn ISD, which has the lowest WADA in Palo Pinto County of $4,703.

Locally, Garner, Gordon, Graford and Palo Pinto ISD receive more per-student WADA – from $5,638 to $6,715. They are all considered Chapter 41, or “property-rich” school districts. But they can suffer from not having enough students and sending more and more funds to the state.

Around the state, the per-student WADA varies greatly. At the lowest end are 10 districts receiving from $3,613 to $4,228 per-student WADA and at the highest end are 10 districts receiving from $9,361 to $12,725.

“Santo ISD is funded at a rate approximately $300 below the state average per student in weighted average daily attendance (WADA), which translates into a significant loss in revenue every year when compared to the state average,” said Gilbert.

“The realization is that the students of this school district are unable to access the revenue dollars available to more than half of the school districts in the state.”

No more local dollars

But there is the added realization that, despite rising local property values, SISD receives no more dollars from taxpayers.

“As the local revenue increases, the state offsets the amount they send to Santo ISD almost dollar for dollar, all to maintain our target revenue number of $4,712,” explained Gilbert.

To help members of the community better understand the issues, the district conducted a public forum on Sept. 15 with 60-70 people present and brought in a speaker to explain the complex issue.

“The general public does not understand that Santo ISD does not get any increased revenue with rising property values. We don’t get any new money from you. It shows that on your tax statement, but the state holds back the difference.”

For example, he said someone who paid $2,000 in taxes to SISD last year could be faced with a tax increase of $2,400 for SISD because of increased property values. It would make sense that the district would benefit from the additional $400, but they don’t.

“The district no longer receives any additional tax revenue from the taxpayer – the additional money stays in the state coffers,” said Gilbert of increased property values. “The new state funding formula froze district revenue without adjusting for inflation and placed the decision of funding cost-of-living adjustments and expenditure increases in the hands of taxpayers.

“In summary, for the school district to generate any additional revenue above the state mandated rate now requires voter approval,” he said.

“If everybody in the public understood this system they would be frustrated with the current funding system for public education in Texas,” Gilbert added.

“We have no way to generate new money for inflation. If taxes rise, the state adjusts the amount coming back into school coffers by that amount. We are ‘revenue neutral.’ We have no way to offset inflation,” said Gilbert.

Although they don’t get more from the state on their current $1.04 M&O rate, Gilbert said that if the TRE passes an additional 13 cents for M&O, the district will keep “a majority of the new dollars in Santo ISD.”

“In addition, Santo ISD will get $40,000 from the state, but the only way to access that is to pass the TRE. Otherwise every year we leave $40,000 in Austin, which translates into a teacher’s salary with benefits,” Gilbert said.

Target revenue

Superintendents over that past couple of years have amplified their concerns about the fixed target revenues while operating expenses like utilities, wages, fuel and food constantly rise.

Gilbert said many superintendents had hoped there would be changes coming out of 2009 Legislative session, but there weren’t.

“The target revenue system was meant to equalize … school district funding. It came about under court order and the result is that it further spread the disparity,” noted Gilbert. He added that the current average state-wide disadvantaged per WADA is $1,527; however, “prior to HB 1 the disparity was somewhere in the $900 range. There are more equity issues now than ever before.”

“Santo ISD is a front runner in this financial issue because the district is one of the school districts in Texas receiving more than $300 below the state average in funding per weighted student,” he said.

“The district is not alone. In the three years since the adoption of the HB 1 school funding system, 252 school districts of the 1,025 in the state have called tax ratification elections. Many more Texas school districts will go to voters this fall in an attempt to gain necessary revenue to operate districts for the next two to four years. These are long range decisions to stabilize school districts,” said Gilbert.

Millsap ISD, which has a target revenue set at $4,715 per WADA, is also conducting a TRE on Nov. 3. After the Index wrote about Millsap’s call for a TRE, the organization Texas ISD cited the article and posted the following on its Web site:

“How do school districts communicate to legislators that giving taxpayers in property-poor districts more voice in this inequitable school funding system is like a cruel joke. The Millsap taxpayers, after raising their tax rate to the max of $1.17, will provide the additional needed revenue, but at a much higher tax rate. This district’s taxpayers will be paying $1.17 for educational opportunity that other districts get for $1.04 or less. Not fair is it?”

If Santo ISD’s TRE fails Oct. 3, Gilbert said the doors will still open on Monday, Oct. 5, but over the next months and years, the school will have to reduce costs in personnel and non-mandated, discretionary programs. This would include extracurricular activities, such as band and the number of offerings of athletics, perhaps at the junior high level. They would have to reduce a nurse from five days per week to three days and consider cutting a pre-K program.

“These are not things we want to do,” said Gilbert.