Randy Hoyer About three-fourths of the school districts in Texas that have called for Tax Ratification Elections have passed them, and the Lampasas Independent School District may find itself on that list if two things happen: the LISD Board of Trustees calls an election for September, and if voters agree to pass the initiative.

Lampasas ISD, facing a financial crisis like a number of its counterparts across the state -- which district officials said has intensified since passage of the educational reform bill, House Bill 1, in 2006 -- is laboring under the weight of a system that froze the state’s funding to that of levels contributed in the 2005-06 school year.

And that funding formula does not take into account rising costs for fuel, utilities, salaries, inflation or other expenses that continue to increase while the state’s contribution does not.

In addition, school officials said, the state takes away $1 in aid for each tax dollar generated locally through increased property values and new properties, which means the state benefits from rising property values by reducing its revenue to schools dollar for dollar.

Shane Jones That leaves little means for districts to generate new revenue except through a tax increase, by enrollment gains -- which LISD Superintendent Randy Hoyer said the district is not experiencing significantly -- or by dipping into a district’s fund balance.

Lampasas ISD has a locally imposed $1.50 per $100 valuation tax- ing limit. And Hoyer emphasized that passing a Tax Ratification Election will not remove the cap.

Cutting budget items is an alltoo familiar scenario for schools, and LISD is no exception. About $1.5 million was cut from last year’s budget, mostly in maintenance and transportation costs, the superintendent said.

In addition, while teachers received a state-mandated pay raise, all other school employees did not get a salary increase, he said.

School taxes serve two basic functions, according to Hoyer: funding for maintenance and operation costs, such as salaries and benefits, equipment, repairs and maintenance, contracted services and other costs for instructional programs including transportation; and what is termed “interest and sinking” funding for debt expenses, which covers principal and interest for outstanding bonds. I&S funds cannot be spent on anything else.

When the Texas Legislature adjusted the tax rate calculations several years ago, it required school districts to lower the portion of their tax rates that represents the maintenance and operations costs. With that, the maximum tax for M&O cannot exceed $1.04 without voter approval.

With voter approval, a district may increase its M&O by 13 cents for a total of $1.17 dedicated to maintenance and operations funding. An election is required if trustees approve a budget that includes a proposed M&O tax rate increase.

Lampasas ISD officials likely will call for this Tax Ratification Election at Monday’s board meeting, and a public hearing will be held prior to calling the election.

If board members agree to hold the election, it will be Sept. 25.

If the TRE initiative passes, the school district will have the opportunity to increase its M&O rate to $1.17 but lower the total tax rate from $1.50 per $100 valuation to $1.46 -- a 4-cent reduction. School officials say this would maximize state funding and generate an additional $1.7 million for operational costs. About $500,000 to $600,000 of that funding would come from the state through its contribution of $1 for each $2 generated locally through taxes.

Also, the state contributes additional funding for a district’s debt, which will allow the I&S tax rate to be reduced 17 cents, school officials said. The district could benefit from similar funding each year for as long as the funding formula remains in effect.

“Currently, the LISD is not taxing at a rate that would generate those available funds,” said Hoyer. “The district has the opportunity to pass a Tax Ratification Election and reduce the overall rate at the same time.”

By passing the TRE, the LISD will have access to state funds that it otherwise would just leave on the table, said the superintendent.

A decrease in the tax rate still could be in the offing if the TRE fails voters’ muster, said Shane Jones, LISD chief financial officer, and it could be as much as a 17-cent decrease in the rate.

But under that scenario, the LISD would have to dig into its fund balance to pay for some items necessary to run a school district, said Jones, who noted a TRE is just a mechanism to generate more funds for a district.

Utilizing the fund balance that has accumulated in previous years to supplement the budget leaves Hoyer concerned about the district’s ability to maintain an adequate operating balance.

“A TRE is the right thing to do for the education of our kids,” said the superintendent. “When we were in school, someone stepped up to provide us with an education, and the way the system is designed, the working generation pays for the education of its younger members, and the cycle continues.”

The LISD can generate additional dollars with a Tax Ratification Election or by dipping into its fund balance, said Hoyer, and it can lower its payroll costs. “In order for the district to keep its head above water, both of those have to be in place. A recent staffing audit showed where a number of positions could be eliminated to help lower payroll costs.”

Also, he said, the state needs to back off on the unfunded mandates.

Said the superintendent: “A Tax Ratification Election will keep our heads above water for the next four to five years. Beyond that, we don’t know.”

Hoyer said 80 percent of the overall budget is dedicated to employee pay and benefits, and he initiated a district-wide staffing plan to reduce positions at every level -- from administrators to teachers to support staff -- through retirements and resignations.

If the TRE fails voters’ muster, the M&O rate will remain at $1.04, and the I&S rate will stay at $.29 per $100 valuation, said Jones. “With a lower M&O rate, the district likely will make cuts to staff, maintenance and programs.”

The school officials asked that voters not be caught up in wording of the TRE ballot. “That is legal language, and the ballot has to read that way,” said Hoyer.

The ballot asks voters to vote “for” or “against” approving the tax rate of $1.46 per $100 valuation for the current year, a rate that is 13 cents higher than the school district rollback tax rate.

“Though the ballot reads like there will be a tax increase if voters cast ballots ‘for’ the TRE, that is not the case,” said the superintendent. “The 13 cents refers to an increase in the M&O portion of the budget, but the I&S rate would drop 17 cents, for an overall tax reduction of 4 cents.”