Explained: Everything voters need to know about Austin ISD's tax rate election

The Austin school board last month adopted a $1.2 billion budget for the 2024-25 school year that depends on voters in November approving a tax rate of 92.87 cents per $100 of property valuation.

The approved budget would leave Austin schools with a $41 million deficit for the upcoming school year. However, district officials said the proposed tax rate would keep the district from having a $78 million budget shortfall.

Statewide, many school districts are grappling with ailing budgets as the Legislature last year did not pass any meaningful increases to public school funding to keep up with rising inflationary costs and demands for additional programming and services as well as employee pay raises — leaving districts to turn to local taxpayers to close the gap.

If the Austin district calls a tax rate election in November, voters would choose between a property tax rate of 83.77 cents per $100 of valuation, which would still raise more revenue than the previous year due to higher property valuations, or the district's proposed higher rate of 92.87 cents.

The Austin school board is expected to join districts such as Round Rock and Pflugerville in asking voters to contribute more to their schools in hopes of staving off deeper cuts that could affect classroom instruction.

What is a school tax rate election?

Also called a voter-approved tax rate election, it asks voters to sign off on a higher tax rate than the school board is allowed to set on its own. The Austin school board plans to call one in November

According to state law, school districts must set their tax rates at very specific numbers. The state calculates rates based on property tax value growth. If a school board wants to raise more tax revenue than what the state allows, the board members must get voter approval for a higher tax rate. A school board that tries to set a lower rate than the state's proposal would draw financial penalties from the state.

Why is AISD asking for a higher tax rate?

The Austin school district's adopted $1.2 billion budget for the upcoming school year comes with a $41 million deficit, if voters approve the proposed tax rate in November.

If voters reject the higher tax rate, the district's deficit would balloon to $78 million, and the school board would probably go back to the drawing board to cut more from its budget.

Austin school officials have suggested cuts in future school years could come from reducing teachers’ planning periods, increasing class sizes in secondary schools and cutting back on software and district contracts.

District leaders have vowed to invest the money generated from the higher tax rate in teacher and staff raises. The district has proposed a $17.3 million package that would put staff pay on par with what other districts pay employees across Central Texas.

About half of the district's teachers would get an average 4.7% pay bump, officials have said. The majority of instructional and noninstructional support specialists, police department employees and auxiliary staff members would also get pay increases.

How would my property tax rate change?

In the 2023-24 school year, the Austin district had a tax rate of 85.95 cents per $100 of property valuation. The owner of a home with an average taxable value of $517,530 paid an estimated $3,589 in school taxes.

If the district calls the proposed tax rate election, voters will choose between the lower tax rate of 83.77 cents — which would still raise more revenue than in the previous year due to higher property valuations — or the district's higher proposed rate of 92.87 cents.

If voters reject the higher rate, the owner of an average home, valued at $563,069 (the average home value grew due to rising property values), would pay about $3,879 in annual school taxes, or about $290 more.

If voters approve the higher rate, property owners will pay on average $712 more in school taxes, or about $4,301 for the year.

What happens to the tax revenue AISD collects?

Although the higher tax rate would generate $171.6 million more than it did last year, Austin schools could use only $41 million, or less than a quarter of what the district would collect. The rest would go back to the state as part of a program called recapture.

Each student has a state-set cost to be educated. If a district, like Austin, collects more in property tax revenue than that set cost based on its student enrollment, the state “recaptures” the extra money and distributes it to districts that collect less property tax revenue than the state determines they need to educate their students.

Last year, the Austin district gave $663.3 million to the state, about 49% of what it collected in property tax revenue, for the recapture program.

The extra revenue the Austin district would collect with the higher tax rate would also be subject to recapture, so the district would keep only about a quarter of every dollar it generates from the higher tax.

Why does AISD have a deficit?

Many school districts are staring down the barrel of budget deficits this year.

Statewide, district leaders have largely blamed the state Legislature for not passing during its 2023 session any significant increase in per student spending, which is the basic building block of public school funding in Texas. School funding became embroiled in a political fight over Gov. Greg Abbott’s priority of vouchers, a controversial program that would use state dollars to pay for private school tuition.

Schools receive roughly $10,400 per child from the state, but an American-Statesman analysis earlier this year found that the districts are getting far less than they did four years ago when adjusted for inflation.

Most districts are also nearing the end of federal COVID-19 pandemic relief funding, most of which expires at the end of this year.

Are other school districts asking voters for tax rate elections?

Last year, Round Rock, Pflugerville and Lockhart school district voters approved similar tax rate elections, among other districts statewide. Districts typically won't get their determined tax rates from the state until August, when they will also set their rates and could call for a tax rate election.

Is a tax rate election different from a bond election?

A voter-approved tax rate election increases a district’s maintenance and operations tax rate, which schools use for basic operations such as paying employee salaries, covering facility utilities and purchasing classroom materials.

A bond election increases a district’s interest and sinking tax rate, also called the debt rate. This is the rate districts use to pay for big, capital expenses such as building new schools and stadiums or purchasing school buses. Austin voters approved a $2.4 billion bond package in November 2022.

When will the Austin school board call the tax rate vote?

The school district is required to adopt its tax rate in August, when it will also probably call for the tax rate election. The election would be held Nov. 5.

This article originally appeared on Austin American-Statesman: What to know about Austin ISD's tax rate election in November