Gonzales ISD considers tax swap


GONZALES — At their meeting of the Board of Trustees on Monday, the Gonzales Independent School District heard a presentation given by Dr. John Walch of Walch Educational Consulting during a budget workshop. Dr. Walch has over 13 years of experience assisting districts leverage their local dollars to maximize state funding without raising taxes. Prior to serving as a consultant, Dr. Walch served as Superintendent and Chief Financial Officer to public school districts including Fredericksburg, Mason, and Bastrop ISDs, so he understands through personal experience what it can mean for a district to be deemed "property wealthy" by the Texas Education Agency. He began his work as an educational consultant to help small districts like GISD recover from the effects of wealth equalization and recapture payments by ensuring they are able to receive the maximum amount of funding from the state without raising local tax rates.

After hearing the information, Gonzales ISD is considering the possibility of joining the ranks of over 57 percent of Texas ISDs who've conducted tax swaps, meaning the district may consider asking voter approval to move 3 pennies from their I&S tax rate to their M&O tax rate. The swap would maintain the same total tax rate of $1.16.

The district lowered its tax rate 2 full pennies last year and would be able to maintain that lower rate while earning approximately $680,000 additional dollars for the M&O budget.

By transferring the pennies to the M&O side, the district would be able to capture additional state funding without increasing the tax burden on local tax payers simply because M&O pennies are weighed more heavily by the State than I&S pennies when the state's portion of funding is calculated. Without the TRE, the district would maintain the same total tax rate, but would not capture the additional monies from the state.

According to an article published recently in the Texas Tribune, the state portion of school district funding is estimated to be as low as 38 percent. (https://www.texastribune.org/2018/02/16/whos-paying-more-texas-education-state-or-local-taxpayers/).

“The methods of financing public education from state funding to more burden on the local taxpayer has been reality for years" said GISD Superintendent Dr. Kim Strozier. "Finding funding opportunities that do not increase the tax burden on the local taxpayer is always a positive. We search for grant funding and apply for those dollars whenever possible. As we enter into a new budget cycle, exploring any avenue for increasing funding is important. One of those methods is to see what has worked for others in the past. As we work to prepare a new budget, our emphasis will be on maintaining the learning resources for our students as well as the competitive resources for our faculty and staff while adhering to effective and efficient financial planning. This is an excellent opportunity for us to increase our state funding while maintaining our low tax rate. Over 50 percent of districts in the State of Texas have passed TREs which is evidence that communities support their children and the future of local communities."

According to Chief Financial Officer Amanda Smith, the state provides extremely limited assistance to districts for their I&S tax efforts. Because of that, it makes sense to move the same tax effort to the maintenance and operations side of the tax rate where the state will provide a significant amount of additional funding. However, because the district is still considered property wealthy by the state, once the M&O rate exceeds a certain point, the district would have to once again send local funds to the state. To keep recapture payments at bay, the district would only swap a portion of its I&S pennies.