October 17, 2017

iChampion School Budgets: Underwood offers simplified view of school funding

DID YOU KNOW: When property valutions rise, state funding decreases accordingly, leaving schools with no increase in funding

Stephenville ISD superintendent Matt Underwood

Editor’s note: Stephenville ISD superintendent Matt Underwood has an ongoing series of iChampion commentaries on school district news, achievements and issues. New installments follow no set schedule and are authored as situations dictate. With a potential May, 2018 facilities bond election looming, Underwood offers a simplified view of school funding with one hard fact we bet most tax payers have never realized.

Special from MATT UNDERWOOD
Stephenville ISD Superintendent

STEPHENVILLE (September 14, 2017) — Often, individuals familiar with city and county governments make budget comparisons with school districts due to the fact all three entities collect property taxes. At first glance, your tax bill collects revenues for all local entities on one statement.

Why can’t SISD reduce taxes like a direct taxing entity (county and cities)?  To answer this question, I thought that I would attempt to break down our budget in somewhat simpler terms.

When starting a discussion about public school funding, I always like to make some correlations between school budgets and home budgets. Stephenville ISD has two basic tax rates that generate a majority of the funding for our school system.

The first tax rate is commonly called the maintenance and operation tax. This tax is levied to fund the basic operations of the schools. Everything from electricity to salaries is encompassed under this umbrella, much like bills that we pay as individuals such as utilities, insurance and groceries.

The second tax rate is levied in order to pay for our construction projects that have been previously voter approved. This tax is commonly called an I&S or interest and sinking tax. An individual budget would correlate this tax to a home mortgage payment.

Let’s first examine how our operations budget is funded. I always use the term current law when referring to school finance due to the volatility of the system and the numerous changes that have affected school finance in recent years. Some basics of the system, however, have remained consistent. The funding sources for school systems come from three main sources. The first and obviously largest amount of funding is from school property taxes. The second source comes through the State Foundation School Program, and this portion is designated as revenue from the state. The third source of revenue available to schools is from federal funding and is based on the number of students that receive free and reduced lunches.

This information is very important for stakeholders of the district to understand. Our funding per student is stagnant and will not change if property values go up or if property values go down in regards to our maintenance and operations budget. If property values increase, as they did this past year, the state simply subtracts the same amount of increase from their revenue contribution. In essence, they take away state funding. The only impact that property values have on our budget is in relation to our construction debt; and those monies must be spent on that purpose.


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