Ron Farr Earlier this month, Lampasas school trustees voted 6-1 to present a proposed tax rate of $1.46 per $100 valuation for consideration at an Aug. 2 public hearing. The meeting will be Monday at 6 p.m., at the Lampasas Independent School District Administration Building.

The proposed overall tax rate would be 4 cents less than the $1.50 rate adopted last year.

Board president James Briggs was joined in the majority vote by fellow trustees Kirk Whitehead, Wesley Crow, Linda Floerke, Dan Claussen and Mark Bishop. The sole dissenting vote was that of board member Ron Farr.

While the overall tax rate for the LISD’s 2010-11 fiscal year would drop four cents, taxes on an average residence in the district would increase because of higher appraisal of local property, a public notice in the July 20 Lampasas Dispatch Record shows.

Last year, the average market value of residences was $112,114; this year, the figure is $120,676, which translates into a proposed tax increase of $78.13 over the current fiscal year, which ends Aug. 31.

Farr said he believes the proposed 2.6 percent cut in the overall tax rate does not go far enough to help LISD residents reeling from what he says is one of the worst economic downturns in United States history. He would like to see the overall rate reduced even more — to $1.33 per $100 valuation, which translates into an 11.3 percent tax cut. And Farr believes he has the figures to justify such a re- duction.

Of the larger cut in taxes he favors, Farr said: “That would give the taxpayer some much-needed relief now.”

Last year’s rate of $1.50 was comprised of $1.04 per $100 for maintenance and operations, and 46 cents for the Lampasas ISD’s interest and sinking fund.

Under the proposed $1.46 rate for this year, $1.17 would be earmarked for maintenance and operations, while 29 cents would go toward debt payment.

The maintenance and operations tax, or M&O in school parlance, covers expenses such as payroll, instructional supplies, maintenance, transportation and technology.

The interest and sinking portion, or I&S, is a voter-approved tax that pays for building construction.

Currently, a school district can assess an M&O tax rate of no more than $1.04 per $100 of property value. That rate can be increased to $1.17 through a successful Tax Ratification Election, however.

“We need it for current services and programs and to keep our head above water,” Superintendent Randy Hoyer said of the proposed M&O rate. “This is a oneshot opportunity to lower the overall tax rate and to have a successful TRE.”

Local officials, in proposing an M&O rate of $1.17 this year, say that if the proposed LISD tax rate is approved by trustees Monday, they will call for a TRE election on Sept. 25. If the election is successful, LISD administrators say, state funding can be maximized. Officials contend that the Lampasas ISD also will receive an additional $1.7 million for operational costs next year and each year thereafter for as long as the current state funding formula exists.

If the TRE prevails, the Lampasas ISD’s self-imposed tax cap of $1.50 per $100 valuation would not be removed, school officials stress.

Hoyer said he or the LISD’s chief financial officer, Shane Jones, will meet with school district residents interested in discussing the proposed tax rate. In addition, school officials welcome the opportunity to meet with clubs and organizations to explain what is at stake, Hoyer indicated.

In a July 13 letter to Briggs, Farr expressed his concerns about a Tax Ratification Election.

“To go to the voters and ask for additional money through taxes, I feel we need a clear and necessary need,” he wrote. “I personally do not think at this time that exists.”

The LISD was not aware until the last few months that the I&S rate could be reduced 17 cents because of state funds received by the district through an Existing Debt Allotment and an Instructional Facilities Allotment, Farr said. In May 2007, Lampasas ISD voters approved $48.85 million in bonds for work that included a new high school and the new Taylor Creek Elementary School near Kempner.

The successful bond issue enabled the Lampasas ISD to qualify for state funds of between $750,000 to $800,000 per year, to retire the construction debt, Farr and other school officials said.

“If we had not received these funds, we would not be considering a TRE,” Farr said in his letter to Briggs. “It appears to me that as soon as we found out that we as a district had qualified for additional funds to help pay for our bond projects ... all of the sudden [we] had an avenue to tax and get more money.”

Concerning the amount of money the state will funnel to the LISD for bond debt reduction, Farr said: “It’s unbelievable. It’s really good.”

But Jones said the state’s funding formula for mid-size school districts such as Lampasas is inequitable. Nothing was built into the formula for salary increases and inflation, he said. Formulas adopted in recent years locked the LISD into old revenue, which creates disincentives, he said.

Under the present system, the LISD has only a few ways to ensure more funding: increased enrollment, passage of the Tax Ratification Election and reduction of personnel, officials said.

Lampasas school officials say that local student enrollment is not growing significantly, and over the past several years food, fuel, utilities and other costs have increased.

As a result, the LISD last year cut about $1.5 million out of its budget, with most reductions coming from the maintenance and transportation budgets. The school district did not provide cost-of-living raises to employees other than teachers, who received a statemandated salary increase, local officials say. Paraprofessionals, support staff and administrators did not get a pay raise. “That creates some pretty tough morale issues,” Hoyer said.

If voters approve the TRE, the school’s increased maintenance and operations tax rate would mean an additional 13 cents per $100 valuation, and those extra pennies are weighted by the state. So, for every $2 in tax revenue generated locally, the state kicks in $1. Thus, $1.2 million would be generated locally, while the state would provide approximately $500,000 more.

But in his letter to Briggs, Farr lists six reasons he believes a true need for the TRE does not exist.

Trustees contracted with the Texas Association of School Boards to do a staffing survey across the LISD, he said. The survey showed areas where there are excess personnel, Farr said. In response to TASB’s findings, the LISD administration set goals to reduce 47 positions -- teachers, teaching assistants, clerical workers and other personnel -- by 2013, to the tune of $1.47 million. Some 11 staff positions would have to be added, though, totaling more than $550,000 in salary and benefits. Overall, more than $925,000 would be saved per year, according to LISD projections.

But Farr notes that to date, only about $32,500 has been saved.

Of the staff-reduction goals, Farr said in his letter to Briggs: “I did vote for this and still do agree with this plan if we do not ask for more taxes to fund it.” Referring to the district’s proposed 12.5 percent increase in the M&O tax rate, Farr said: “If we are going to go to the taxpayer and say we need more money, I do not support waiting for three years to implement this [staff reduction] plan. I do not know of any local business that has approximately 35 excess positions that total near one million dollars in additional payroll that are sitting there making decisions to continue spending the money on one hand and crying about being broke on the other.”

Farr added that “with the current information we have, we should go ahead and scale down some of the non-contracted positions that are documented to be excessive.”

In an interview with the Lampasas Dispatch Record last week, Farr said a financially healthy school district needs about three months’ worth of revenues in its fund balance. For the LISD, that would be about $7 million in reserves, and the local district has $12 million to $13 million in its fund balance, he said.

Farr -- a general contractor who has been on the board seven years and whose wife, Cissie, has taught locally for 17 years -- said when he first was elected as a trustee, the LISD had about $3 million in its fund balance. “I believe this is the time to make a decision to use the additional fund balance to run our district and give the taxpayer a much-needed break,” he said.

A TRE would raise some $1.7 million if voters OK the hike in the M&O rate, Farr said. “It is not clear to me exactly what these funds would be used for,” he wrote in his letter to Briggs, which also was forwarded to Hoyer.

“In our meetings, we talk about deferred maintenance, not buying buses, inflationary costs on utilities and fuel, and not being able to give raises. Why would this take $1.7 million to do, over and above what we have available? I have never seen a breakdown of how we plan to use the additional money — just that we need it. I disagree. Show me a plan. Show me a breakdown of where these funds are going to be used, not just: We need more money, more taxes.”

Farr noted that during trustees’ July 12 meeting board members asked the administration what the cost would be to give an acrossthe board, 2.5 percent raise to personnel.

But, the trustee questioned whether the LISD should be “looking at giving raises to 35 positions that we don’t even need.”

“This is approximately $1 million in payroll, which would be $25,000 in raises to personnel not essential to the district. This is telling the taxpayer: We have $1 million in excess payroll, we are going to give them a $25,000 raise, and we need you to pass a TRE that raises $1.7 million, because we are going broke. This does not compute. If we are going broke, this one area shows waste of over $1 million a year. We need [to get] our own house in order before asking for additional funds.”

Farr maintains no plan exists for the use of the LISD’s excess fund balance.

“My understanding was if we ever got in a position where we needed additional money, this would be used to help for ‘a rainy day.’ In my opinion, with the current economic conditions, today is that ‘rainy day.’ Historically, we are experiencing one of the worst economic downturns on record, so it is not the time to ask for more from our taxpayers when we are sitting on excess funds.”

On another point, Farr said it is his understanding that buses were not ordered and maintenance was deferred on some items last year. He said he supports keeping the LISD’s fleet of vehicles in good working order through the purchase of new equipment yearly, so the district will not have a glut of older vehicles. But he believes use of the Lampasas ISD’s reserve funds and a reduction in staff, rather than raising taxes, is the way to address deferred maintenance issues.

“The direction I think we as a district should be going is to use the excess fund balance of $5 million over the next three years,” Farr stated in his letter. “This would give us approximately the same $1.7 million a year that a successful TRE would generate.” He added that if the additional $1.7 million per year from the fund balance is not enough to cover expenses, he favors “fast tracking the staffing goals, giving us an additional $925,000, for a total of $2.625 million a year.”

Over the next three years, Texas will have had two legislative sessions and lawmakers will have arrived at a new funding formula, Farr said. A new formula could help, or hurt, the local school district, he acknowledged.

But he expressed optimism that even three years from now, the LISD still will have a cushion of three months’ operating expenses in its fund balance.

“When three years have passed, and we know what the funding from the state is, we will be better able to know what the district needs are,” Farr’s letter said. “We will have shown fiscal responsibility to our community, and if there is a need to increase taxes through a TRE, I believe that would be the time to do so.”

The trustee said he has talked with close friends to get their thoughts.

“All of them have indicated that they don’t think we need to raise taxes,” Farr said.

Should the proposed LISD tax rate be approved next week and a Tax Ratification Election called, the veteran board member sees rough sledding ahead.

“I believe it will be hard to pass,” he said of the TRE. “People are not very positive toward governmental entities as a whole now.” Added Farr later: “I think a TRE would be an extremely hard sell now.”

Though a dissenting voice, he does not expect to sway other trustees -- at least for now.

Of Monday’s vote on the school tax rate, Farr said, “All indications are that it will be a 6-1 vote.”

He said he understands why Hoyer and Jones have offered the proposal to increase the M&O tax rate. Funds generated by a TRE would make it easier to run the local schools and to provide additional opportunities for more programs. “I don’t blame them at all,” Farr said.

Nevertheless, he said, “I have a track record that I support the students and what they need. I’m just not sold on the fact right now that we need the TRE, because we have avenues of funding other than raising taxes.”

Last year, trustees approved a budget of more than $24.8 million for the 2009-10 school year. The LISD’s fiscal year runs from Sept. 1 through Aug. 31.

A public meeting on the proposed budget for the new school year will be Aug. 30.