Lufkin ISD

Tax Ratification Election (TRE)

Lufkin ISD’s Plan to generate

an additional $3,000,000 without a tax rate increase

Two Types of School Taxes

• (M&O) Maintenance and Operations

Pays the operating expenses of the district.

Utilities, Supplies, Equipment, Salaries

• (I&S) Interest and Sinking

Debt taxes that pay the principal and interest on voter-approved bond issues.

Opportunity Available for Lufkin ISD:

• “Swapping Pennies”

• The pennies of our tax rate are worth different amounts of state aid.

• By moving pennies from one category to another, Lufkin ISD can increase the return on our tax dollars.

Lufkin ISD’sTax Rate Swap Possibility

Tax Rate Swap   w/o TRE w TRE Difference

Tax Rate 2014- 2015- 2015- 2015-Scenarios 2015 2016 2016 2016

M&O Rate $ 1.040 $ 1.040 $ 1.170 $ 0.130 I&S Rate $ 0.173 $ 0.173 $ 0.043 $ (0.130) Total Rate $ 1.213 $ 1.213 $ 1.213 $ -

Additional M&O $   $ -

$3,000,000

$3,000,000

Voter Approval Needed

If Lufkin ISD wants to adopt a $1.17 M&O tax rate, and the additional $3,000,000 it generates, it needs voter approval of its total rate at a TRE.

Lufkin ISD and the TRE

• Lufkin ISD is asking voters to consider approving the $1.17 M&O tax rate and the (I&S or debt rate) in a TRE so that it can obtain the additional $3,000,000 that the $1.17 tax rate generates

• If the Board does not adopt the $1.17 the voters will not have the opportunity obtain the additional funds. The $3,000,000 is left on the table at a time that it is needed.

The opportunity to generate additional funds is now.

• Lufkin ISD can generate an additional $3,000,000 in M&O funds this year by increasing the M&O rate from $1.04 to $1.17, an increase of $0.13.

• Lufkin ISD will still have an M&O rate that is $0.33 lower than its 2005 M&O rate of $1.50.

• At $1.17, Lufkin ISD cannot increase its M&O tax rate without a change in state law.

An opportunity to reduce our Debt Rate(I&S) is now.

• Current law allows school districts to use I&S and M&O fund balance to pay debt.

• The additional M&O funds generated by the $1.17 rate more than replace the funds needed to pay debt.

• We can reduce our debt rate by $0.13 cents, from $0.173 to $0.043, by using fund balance for debt payments.

M&O pennies generate more state aid than debt

pennies• Lufkin ISD receives less state funding for its I&S

(debt) pennies, while it receives much more state funding for its M&O enrichment pennies

• Investing Lufkin tax pennies in the M&O pennies brings more state dollars to Lufkin than investing in debt pennies.

• That’s why a tax rate swap works.

What is a Failsafe Tax Rate Swap?

• A Failsafe Tax Rate Swap protects the ability to make the debt payment if voters do not approve the TRE

• You really shouldn’t drop the debt rate $0.13 unless voters approve the extra money from the additional 13 M&O pennies.

• The failsafe strategy does this.

A Failsafe Tax Rate Swapprotects debt rate

Lufkin ISD     Rate Tax Rate Difference Tax

RatificationLast

Year's Tax Rate if voters if voters   Election

(TRE) Tax

Rates Election

(TRE) don't

approve approve  

  Tax Rates $ 1.343 $ 1.343   Nov. 3, 2015 2014-2015 2015-2016 2015-2016 2015-2016 2015-2016

M&O Rate $ 1.040 $ 1.170 $ 1.040 $ 1.170 $ 0.130

I&S Rate $ 0.173 $ 0.173 $ 0.173 $ 0.043 $ (0.130)

Total Rate $ 1.213 $ 1.343 $ 1.213 $ 1.213 $ -

Additional M&O $     $ - $ 3,100,000 $ 3,100,000

Impact of Proposed Tax Rate

• 2014/15 2015/16 Proposed Rate

• Avg Home $108,896 $ 111,151• Taxable $ 93,398 $ 86,243 Tax Rate $ 1.213 $ 1.213• Tax $1,132.92 $1,046.13

• Tax Decrease $86.79 Per Year

What can $3,000,000 additional dollars do for

Lufkin ISD?

– Provide enhanced compensation plan

– Continue to provide exceptional learning experiences

– Capital Improvements• Parking Lot Lighting and Paving

• Future painting, AC, and Roofing needs

Economic Development

• Economists say that a dollar bounces around in local economy about 7 times. Just imagine the positive economic impact $3,000,000 can have on our community.

Previous TREs

• All school districts in our county have already passed a TRE and we will continue to have the lowest tax rate in the county.

Angelina County: Hudson ISD, Huntington ISD, Zavalla ISD, Diboll ISD, Central ISD

Other Districts: Lindale ISD, Wells ISD, Nacogdoches ISD, Longview ISD, to name a few.

TRE Ballot Language

• In the TRE, voters will vote for or against “approving the ad valorem tax rate of $1.343 per $100 valuation in the Lufkin ISD for the current year, a rate that is $0.13 per $100 valuation higher than the rollback tax rate.”

Two Possible Results of the TRE

• If the majority vote for the $1.343, $1.213 will be the district’s tax rate, because of previous contingent board action to reduce debt rate $0.13 if voters approve the $1.343. The district will have access to over $3,000,000 in additional funds this year and every year thereafter

• If a majority vote against the tax rate of $1.343 the tax rate will be $1.213. The district will not have access to over $3,000,000 in additional funds this year and every year thereafter.

Taxes still Frozen on Over 65 and Disabled Homesteads

• Tax bills on Over 65 or Disabled Homesteads will not go up. They will never go up unless improvements are made to the homestead.

The results of approving the $1.343 tax rate are:

1. A total tax rate of $1.213, because of previous board contingent action to reduce the debt rate by $0.13 if voters approve the $1.343

2. Significant additional dollars (over $3,000,000) which will replace state funding cuts

3. The average residential homestead tax bill will decrease $86.79

4. No increase in tax rate from 2014.5. No future M&O tax increases without a change in state law.6. Significant economic development in Lufkin 7. Lufkin students will benefit from the highest levels of

funding available with no increase in cost to Lufkin taxpayers.

Results of not approving the $1.343 tax rate

• 1. The tax rate will remain at $1.213, the same rate if voters had approved the $1.343 because of previous board contingent action to reduce the debt rate $0.13 if voters approved the $1.343.

• 2. The district will not gain an additional $3,000,000 in state aid this year.

• 3. The average residential homestead tax bill will decrease $86.79

• 4. No change in tax rate this year from 2014.• 5. Lufkin students will not benefit from the highest

levels of funding.• 6. The opportunity for significant economic

development in the Lufkin community will be missed.

Early Voting

October 19 – 23, 2015 8 a.m. to 4:30 p.m.

October 24, 2015 8 a.m. to 5 p.m.

October 25, 2015 1 p.m. to 5 p.m.

October 26 – 30, 2015 8 a.m. to 4:30 p.m.

To be held at Lufkin ISD Administration Building

Off Mobile Voting Locations

October 20, 2015 Lufkin Middle School, 9 a.m. to 9 p.m.

October 27, 2015 Brandon Elementary, 9 a.m. to 9 p.m.

October 30, 2015 Lufkin High School, LHS Library 9 a.m. to 4:30 p.m.Tom Jack Lucas 6 p.m. to 10 p.m.