Burnet Consolidated ISD

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District » Tax Ratification Election (TRE)

Tax Ratification Election (TRE)

If Approved by Voters, the Tax Ratification Election (TRE) will lower the BCISD overall tax rate from $1.28 to $1.26 and the District will receive approximately $600,000 annually in additional operating revenue. 
On July 11, the Burnet CISD Board of Trustees unanimously approved to order a Tax Ratification Election (TRE) on August 25, which if approved by voters, will lower the BCISD overall tax rate from $1.28 to $1.26 and the District will receive approximately $600,000 annually in additional operating revenue not subject to recapture. More specifically, if passed, the TRE would “swap and drop” sources of tax revenues resulting in:
● an increase of the maintenance and operations tax rate (M&O) by 2 cents;
● a drop of the interest and sinking (I&S) tax rate by 4 cents;
● a combined effect to lower the overall tax rate by 2 cents to $1.26 per $100 of tax valuation (from the current total tax rate of $1.28);

● an increase in the amount of local M&O tax dollars collected in Burnet CISD, that are not subject to recapture by approximately $600,000 annually, allowing for more local control of local revenue.

For the first time in the District’s history, Burnet CISD will be sending property taxes generated in Burnet CISD to the State as part of the “Robin Hood” school finance plan. The District is projecting that this recapture payment will be $500,000 for the 2018-2019 school year and $2.2 million in 2019-2020. These are funds that will not be available to support innovative programs and initiatives, teacher pay raises or school safety initiatives in Burnet CISD, but will instead be redistributed to other Texas school districts.
Texas school districts’ tax rates are broken up into two separate rates – an Interest and Sinking (I&S) rate that funds the payment of debt from bonds that are used to build and maintain school buildings, and Maintenance and Operations (M&O) rate that funds everything else including programming, teacher salaries, and utilities. The M&O rate is currently capped at $1.04 per $100 property valuation, but can be raised with the community's approval.

Swapping the two cents from the I&S side to the M&O side will allow Burnet CISD to access two additional "Golden Pennies," which are not subject to recapture while also lowering the overall tax rate from $1.28 to $1.26. All local revenue that is a result of Golden Pennies will stay in Burnet CISD. That's more money for your schools while lowering your overall tax rate.

The Burnet CISD Board and administration are committed to utilizing the additional revenue to continue to focus on:
• teacher recruitment and retention;
• safety and security of students and staff;
• maintaining and expanding educational programming
If you have questions about the Tax Ratification Election or would like for someone to speak to your group, please email TRE@burnetcisd.net.  
Please review the Frequently Asked Questions below:
Frequently Asked Questions
How much money will BCISD have to send to TEA as part of "Robin Hood" School Finance Plan in 2018-2019?
What is the "Robin Hood" School Finance System?
Much like the legend of Robin Hood, Chapter 41 of the Texas Education Code “takes from the rich to give to the poor.” The law “recaptures” property tax revenue from property-wealthy school districts and redistributes them to property-poor districts, in an effort to equalize the financing of all districts throughout Texas.
How much money will BCISD have to send to TEA as part of Robin Hood School Finance Plan in 2019-2020?
$2.2 million
What is special about the 2 additional cents or "golden pennies"?
The additional two cents are not eligible to recapture as part of the law to provide significant Local Control of the District’s tax rate to the Board and the District’s tax payers.
How much money will be generated by the 2 golden pennies?
$600,000 of which ALL stays in Burnet CISD.
If approved, what will the District’s tax rate be? And then what will it be next year?
The total tax rate for 2018-2019 would be $1.26, which is two cents less than this year’s rate. The projected tax rate for the next year would also be $1.26. There will not be an increase because the District has forecasted future payments out 10 years and no rate increase will be required to service the District's debt.
What happens when a new bond has to be issued for future growth?
The bond payment schedule is set up so a significant amount of capacity becomes available in 2020 and then again in 2023. In those years a bond could be passed, if needed, without an increase to the tax rate.
Why not just lower the I&S rate without increasing the M&O rate by 2 cents?
The 2 cent increase generates an additional $600,000 for the Burnet CISD General Fund and will help to offset the loss of $500,000 due to recapture. All of the funds generated by the additional two cents will remain in the District. This increase of revenue will facilitate the continuation of teacher pay raises, support the district's school safety initiatives and innovative educational programs.

What is does it mean to "swap and drop"?
The tax ratification measure would swap and drop sources of tax revenue and add more funds to the District’s operating budget by swapping two cents from the District’s interest and sinking (I&S) tax rate to the District’s maintenance and operations (M&O) tax rate, decreasing the (I&S) tax rate an additional 4 cents, changing the M&O rate from $1.04 to $1.06 per $100 valuation and reducing the I&S rate from $0.24 to $0.20 per $100 valuation. The district’s overall current tax rate of $1.28 would drop to $1.26 per $100 valuation. Approval by voters would generate an estimated $600,000 of local tax revenue that stays in the community for school operations.

Why is the Board considering a Tax Ratification Election?
The approach is intended to help Burnet CISD meet its shared commitments to the children of Burnet CISD and the entire community. Next year, Burnet CISD will begin sending money back to the state because of recapture. The Tax Ratification Election increases the amount of local dollars Burnet CISD is able to keep in the District for operations while also lowering the District’s overall tax rate.

What are the shared commitments to the community?
This proposal, should it be approved by the voters in August, would allow the community of Burnet CISD to increase the amount of local revenue in Burnet CISD and therefore help to ensure the community's shared values to: attract and retain high-quality staff; provide for the safety and security of students and staff and expand educational programs.

For the community members who do not have children in Burnet CISD, this proposal, if approved, will lower the Burnet CISD overall tax rate in a fiscally responsible manner.

How will the Tax Ratification Election benefit the District?
Approval by voters would generate an estimated additional $600,000 of local tax revenue that stays in the Burnet CISD community.

What is a Golden Penny?
In Texas, school districts can set an M&O tax rate up to $1.17 per $100 of valuation. This possible M&O rate is divided into three distinct tiers based on the recapture level for Chapter 41 (Robin Hood) districts.

Tier 1 covers the first $1.00 of the M&O tax rate and if school districts exceed a specified wealth level per student, they must send tax receipts generated from the excess wealth per student to the state. All of the recapture that Burnet CISD expects to pay ($500,000 projected for 2018-2019) is based on this first $1.00 of M&O taxation.

The second tier covers the next $0.06, known as the Golden Pennies because tax receipts collected from these six pennies are not recaptured. In 2018-19 each of Burnet CISD’s golden pennies is worth approximately $300 thousand. The final tier, which encompasses the 11 pennies between $1.06 and $1.17 are known as the copper pennies because they are recaptured at an even higher rate than Tier 1. In fact, after recapture, one copper penny provides less than one quarter of the net revenues provided by a golden penny. For this reason, the Board does not believe that copper pennies are a good value for Burnet CISD and its voters and has no plans to access them.

To provide some perspective, in 2006 most school districts in Texas had an M&O tax rate of $1.50. The school finance reform that was implemented between 2006 and 2008 compressed M&O rates to lower tax rates. Following compression, school districts were allowed to access up to four golden pennies without seeking voter approval; most districts, including Burnet CISD, chose to do that. In order to access an M&O tax rate above $1.04 (Burnet CISD’s current rate), districts must seek voter authorization through a TRE. The Board of Trustees is seeking voters’ consent to access the two remaining golden pennies which would increase operating revenues for the District by approximately $600,000 in 2018-2019 and more in subsequent years.

What language will be on the ballot?
The ballot language for the Tax Ratification Election may be confusing to voters due to the technical language required by law. Please see the sample language voters will see on the ballot.

Burnet Independent School District Tax Ratification Election

Approving the ad valorem tax rate of $1.26 per $100 valuation in the Burnet Independent School District for the current year, a rate that is $0.02 higher per $100 valuation than the school district rollback tax rate, for the purpose of (i) decreasing the overall ad valorem tax rate from $1.28 to $1.26, (ii) decreasing the District’s Interest & Sinking rate by $0.04 and (iii) accessing additional local operating revenues.
Aprobar la tasa de impuesto ad valorem de $ 1.26 por cada $ 100 de valuación en el Distrito Escolar Independiente Consolidado de Burnet para el año actual, una tasa que es $ 0.02 más alta por cada $ 100 de valoración que la tasa de impuestos retroactivos del distrito escolar, con el propósito de (i) disminuir la tasa impositiva ad valorem de $ 1.28 a $ 1.26, (ii) disminución de la tasa de Interés y Hundimiento del Distrito en $ 0.04 y (iii) acceso a los ingresos operativos locales adicionales.

Voting “for” the TRE will authorize the increase of the maintenance and operations tax rate 2 cents. With the 4 cent decrease to the interest and sinking fund rate, the final result is an overall reduction in the total tax rate of 2 cents.

How can Burnet CISD afford to drop the tax rate?
For years, Burnet CISD has been dedicated to operating as fiscally responsible as possible and paying down debt quickly. As the District accelerates repayment of its debt, it has accrued substantial savings on interest payments. Burnet CISD is now at the point where it has paid off enough debt so it can drop the I&S rate, and simultaneously access the “Golden Pennies.”

Another contributing factor relates to the increased assessed valuation in the Burnet CISD community.

How will the Tax Ratification Election affect taxes for homeowners?
The Tax Ratification Election adds more funds to the District’s operating budget by swapping two cents from the District’s I&S tax rate to the District’s M&O tax rate, changing the M&O rate from $1.04 to $1.06 per $100 valuation and reducing the I&S rate from $0.24 to $0.20 per $100 valuation. The District’s overall current tax rate of $1.28 would drop to $1.26 per $100 valuation.

If a homeowner’s tax payment is frozen, they may not see a decrease - the amount of their tax payment, by State law, will stay at the frozen dollar amount unless the lower tax rate results in a lower payment. See “How will this affect homeowners over 65 who have their taxes frozen?” (below).

How will the Tax Ratification Election affect taxes for businesses?
If approved, the decrease in the overall tax rate would also apply to businesses in Burnet CISD. Businesses would see a decrease in the overall tax rate at $1.26 per $100 valuation.

How will this affect homeowners over 65 who have their taxes frozen?
If a homeowner’s tax payment is frozen, they may not see a decrease - the amount of their tax payment, by State law, will stay at the frozen dollar amount unless the lower tax rate results in a lower payment. (If a homeowner has had their taxes frozen recently, depending on how high their appraised value increased, they could see a decrease.)

What is the history of Burnet CISD's tax rate?
In 2005-06 Burnet CISD had a $1.74 total tax rate. That rate was compressed to $1.275 in 2007-08 and got as low as $1.2625 in 14-15. In 2015-16, the District passed a bond and the rate was raised to $1.33. The tax rate has decreased to a current rate of $1.28 and the proposed 18-19 rate of $1.26 would represent the lowest tax rate in Burnet CISD in decades.

How long has Burnet CISD had the ability to call a Tax Ratification Election and ask for the additional $0.02?
The ability to call a TRE came with the property tax compression law of 2007. The Burnet CISD School Board has not attempted to access the additional two pennies until absolutely necessary. The Board has continued to be dedicated to providing the lowest possible tax rate.

How does the current tax rate of $1.28 compare to surrounding districts?
Burnet CISD already has one of the lowest tax rates in the area. The lower rate would rank the District as the 2nd lowest in the area.
Burnet CISD           $1.28
Leander ISD            $1.51
Liberty Hill ISD     $1.54
Florence ISD           $1.37
Llano ISD                  $1.17
Taylor ISD                 $1.57
Marble Falls ISD   $1.28
Georgetown ISD  $1.41
Lampasas ISD        $1.43

What does the "Rollback" tax rate represent?
The Rollback Tax Rate places a limit on the tax rate that can be adopted without seeking voter approval through a Tax Ratification Election (TRE). Even though the total tax rate the Board adopted in August is lower than the total Rollback Tax Rate, the M&O portion of the adopted tax rate is higher than the M&O component of the Rollback Tax Rate, necessitating the TRE called for August 25th.
State Funding

How is Burnet CISD funded?
Burnet CISD is funded primarily through local school property taxes, supplemented with money from the state, based on a per-student formula that takes into account special circumstances, such as limited English proficiency, special education, etc. How much a district can tax is dictated by the State, and because Burnet CISD is a recapture, or Robin Hood, district the State receives a large portion of local tax dollars.

Further, as local tax revenue per student goes up, the State’s portion of funding goes down.

What is M&O versus I&S taxes?
The Maintenance and Operations fund (M&O, also known as General Fund) is used to pay for the day-to-day operations of the District, including payroll, programming, maintenance, security, supplies, etc. Recapture (Robin Hood) is paid from the General Fund, reducing the dollars available for district operations.

The Interest and Sinking fund (I&S, also known as Debt Service Fund) pays for the District’s debt, taken on through the sale of bonds for capital improvement projects such as school renovations, technology and school buses. I&S funds can only be used to repay bonds – they cannot be used for operational expenses such as salaries.

When is Election Day?
Election Day is August 25, 2018. The last day to register to vote in this election is July 25. Early voting runs August 8th thru August 21st.

Where do I find voting information or where to vote?
All election information is located on the District’s website at www.burnetcisd.net. All questions can be sent via email to TRE@burnetcisd.net.

Where can I learn more about the Tax Ratification Election?
Burnet CISD is offering several opportunities to learn more about the Tax Ratification Election. Please look under the Informational Meetings found on the right side of this page.

Can I schedule a presentation for my group?
Yes, we are continually scheduling presentations so check this site often. If you would like to have a presentation with your neighborhood or group, please contact us at TRE@burnetcisd.net.
Informational Meetings
July 14
Valley Lodge, 6:30 p.m.
July 18
Rotary Club of Burnet, Reed Building, 12:00 p.m.
July 19
Kiwanis Club, First Lutheran Church, 12:00 p.m.
August 2
Coffee with the Superintendent, Parent Resource Center, 202 East Brier, 8:00 a.m. 
August 9
Burnet CISD Staff, 9:00 a.m.
August 13
Bertram Chamber of Commerce, 11:00 a.m.
August 13
Burnet Chamber of Commerce, 12:00 p.m.
August 16
Meet the Bulldogs, 6:00 p.m.
 TRE Information
DailyTrib TRE Story Link
Burnet Bulletin TRE Story Link
TRE Mailer (Click to Enlarge)