The school district proposed to reduce property tax rates for the upcoming fiscal year by 4.14 cents based on an estimate by the district’s chief assessor, bringing the total tax rate to about $1.28 per $100 for properties in the area.
The Plano ISD Board of Directors will hold a public hearing to discuss the proposed property tax rate at its 6 p.m. meeting on Tuesday.
The current tax rate is approximately $1.32. This would be the fourth year in a row that PISD has lowered its tax rates, even though there has been a budget deficit for the past two years.
Yet raising property tax rates for the district would not put more money in the district’s pocket. Christy Rome, executive director of the Texas School Coalition, said that’s a common misconception.
“They think when they pay more property taxes their school gets more funding, and that’s just not the case,” Rome said.
Public schools in Texas are funded by local property taxes and state money, as well as some federal dollars. The state calculates the amount of public funding a district receives based on the number of students in the district and the amount it collects in local property taxes. If a district collects more money in property taxes than the state has decided it is entitled to, the state collects that excess money and redistributes it to Texas school districts with less real estate wealth.
Known as the clawback, the state redistributes property tax wealth to help equalize education funding in Texas due to a lawsuit in 1993. Since then, Plano ISD has paid out more than 2, $4 billion to the state in the form of clawbacks.
Of the 160 school districts in the state’s 1,022 districts paying reclamation, Plano ISD paid the third-highest amount last year, behind Houston and Austin ISDs. Johnny Hill, Plano ISD’s assistant superintendent for business and employee services, said 36% of every tax dollar collected by the district goes to the state.
Property values in Plano are rising. Student enrollment is down, which means the district is getting less money from the state based on daily enrollment. All of this contributes to the district’s increased recovery payments.
But the cost of running schools in Plano is also rising due to inflation. Hill said the state has not adjusted the amount of funds school districts receive from the state for inflation.
“While costs are rising, we are still receiving the same amount of money we received four years ago,” he said.
The district will receive certified property value estimates from the Chief Assessor on July 25th. If the district determines that the tax rate should increase based on these estimates, this will need to be approved by voters. Otherwise, the new tax rate will be adopted on August 16.
The Texas Legislature passed clawback reform in 2019 through House Bill 3, which invested more public funds in public education and required districts to lower property tax rates. These changes increased the amount of money recovered that year from $3.6 billion to $2 billion, according to the Texas Education Agency.
Yet Rome said the funding formula established by House Bill 3 had failed to catch up with inflation and the clawback was growing more than the state expected. Tarrah Lantz, outgoing Plano ISD APE board chair, said recovery is still an issue.
“We really thought we saw Plano ISD’s highest payout to the state, but it just keeps getting bigger,” Lantz said. “Everything they’ve tried to fix isn’t working.”
The state collected more recovery payments in 2021 than it had anticipated. Rather than increasing funding for schools, Rome said the money was ending up in state savings. In 2021, recuperation was the state’s third highest earner, according to the Texas School Coalition.
Hill said an unexpected increase in property values benefits the state budget.
“That means they can reduce what they have to contribute,” he said.
Hill said Plano ISD is meticulous with its budget to protect teachers and students from the effects of clawback and inflation. Every dollar spent must be accounted for, he said, and that helps protect school programs and salaries — which the district recently increased.
Still, Lantz said the district couldn’t operate on a budget deficit any longer.
“At some point soon we’ll get to the point where tougher decisions have to be made,” Lantz said.
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