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

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Chapter 41: Headed Towards the Wall

• f Recapture

Presented by

• Dr. James Terry

Chief Financial Officer Finance and Accounting Services Division

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.

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*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 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

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Equalized Wealth Levels

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• 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

Source: TEA website Chapter 41 Wealth Equalization and Chapter 41 Status Letter

Hitting the Wall

6 $389,604 $362,349 $366,223 $379,688 $407,185

$433,057

$504,366 $552,709 $595,610 $646,312 $694,720 $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000

Wealth per WADA

$514,000 EWL 1

Dallas ISD’s Projected Recapture

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866 1,009 1,105 1,191 1,293 1,389

• 77

163 265 361

• 200

400 600 800 1,000 1,200 1,400 1,600 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 Millions

M&O Tax Collections Subject to Recapture

M&O Collections Chapter 41 Payments

13.7% 20.5% 26.0% 7.0%

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
• r 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.

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Dallas ISD Tax Rate vs Consumer Price Index (CPI)

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190 200 210 220 230 240 250 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 CPI

M&O Tax Rate $1.04

CPI has increased 15.4% since 2007, while the District’s tax rate has remained static at $1.04

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

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And Dallas ISD’s student population require additional resources & support

*Source: Texas Academic Performance Report 2014-15.

District Enrollment African American Latino White Economically Disadvantaged English 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%

TUC (% of state)

809,402 21% 21% 5% 20% 20% Texas 5,215,282 13% 52% 29% 59% 18%

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Dallas County ISDs Tax Rates

ISD Name M&O Tax Rate I&S Tax Rate Total Tax Rate

Grand Prairie Independent School District $ 1.1700 $ 0.4250 $ 1.5950 DeSoto Independent School District $ 1.1700 $ 0.2900 $ 1.4600 Coppell Independent School District $ 1.1700 $ 0.2690 $ 1.4390 Lancaster Independent School District $ 1.0400 $ 0.5000 $ 1.5400 Duncanville Independent School District $ 1.0400 $ 0.4895 $ 1.5295 Cedar Hill Independent School District $ 1.0400 $ 0.4850 $ 1.5250 Irving Independent School District $ 1.0400 $ 0.4050 $ 1.4450 Mesquite Independent School District $ 1.0400 $ 0.3700 $ 1.4100 Ferris Independent School District $ 1.0400 $ 0.3150 $ 1.3550 Garland Independent School District $ 1.0400 $ 0.3133 $ 1.3533 Richardson Independent School District $ 1.0401 $ 0.3000 $ 1.3401 Grapevine-Colleyville Independent School District $ 1.0400 $ 0.2801 $ 1.3201 Dallas Independent School District $ 1.0401 $ 0.2420 $ 1.2821 Carrollton-Farmers Branch Independent School District $ 1.0400 $ 0.2417 $ 1.2817 Sunnyvale Independent School District $ 1.0240 $ 0.3860 $ 1.4100 Highland Park Independent School District $ 1.0267 $ 0.0852 $ 1.1119

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Note: 483 of 1556 Texas ISDs have set $1.17 tax rate

Source: 2015 Tax Rates and Levies - Texas Comptroller of Public Accounts

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Q&A

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