AISD avoids dipping into savings

The Austin Independent School District board of trustees unanimously passed the Fiscal Year 2015-16 budget at Monday’s regular meeting, and thanks to a record increase in certified property values, the district will most likely avoid dipping into its contingency funds.

This year’s budget has been the subject of a long, drawn-out process that balanced employee demands for a 5 percent raise against financial hardships. Further complicating things, AISD has seen its student enrollment decline by an estimated 2,000 in the past two years, which means it can expect less state funding.

Moreover, the district is receiving only a portion of revenue from the Austin area’s unprecedented spike in appraised property values. AISD is required to funnel hundreds of millions of dollars of local property revenue back into state coffers because of recapture laws. Under Texas’ Robin Hood school finance system, the state takes a portion of local property tax revenue from property-rich school districts to subsidize property-poor school districts.

According to the passed budget, AISD is expected to hand back about $272.8 million in local property revenue to the Texas government, a 55 percent increase over last year and an all-time high. AISD’s overall budget, before subtracting recapture payments, is about $1.2 billion dollars.

At the meeting, Vice President Amber Elenz noted that this billion-dollar buzzword has been “fun to say,” but in reality, AISD has only $729 million to work with in its operating budget once recapture, bond payments and federal funds toward food payments are excluded.

“I woke up this morning to radio shows talking about how much money we spend,” Elenz said. “But not only is (our operating budget only) $729 million, but that’s $2 million less than it was last year, and we have been cutting and cutting.”

Even with cuts, the operational expenditures include a 3 percent across-the-board raise for all AISD employees that will cost $14.7 million. That raise is slightly lower than the original request of 5 percent, but Ken Zarifis, president of the Education Austin union, lauded the raise as a win for all employees during the meeting’s public comment portion.

According to board documents, the 3 percent raise was largely offset by a $13.8 million reduction in payroll costs associated with declining student enrollment.

But it was a larger-than-expected increase in revenue associated with certified property values that ultimately spared AISD’s contingency fund. Previous projections had suggested that AISD would be drawing $9 million out of savings in FY 2015-16. Chief Financial Officer Nicole Conley said a jump in the estimated tax revenue increase – to 15 percent, up from 12 percent in the August recommended budget – closed the gap.

“We anticipate the revenue collections to increase by $15 million – over a third of that goes into recapture. The remaining $10 (million) net, we attain,” Conley explained.

Conley noted that keeping student enrollment above the budgeted level of 84,021 is key to maintaining AISD’s FY 2015-16 balanced budget. AISD currently sits at only 82,482 students as of Monday, but district enrollment has not yet peaked. In addition, the FY 2015-16 budget incorporates a $797,138 marketing fund to help boost student enrollment.

AISD trustees are hoping for relief as the Texas Supreme Court began hearing arguments challenging the constitutionality of the Texas school finance system Tuesday in an ongoing lawsuit.

“When you don’t see our operating budget growing, it occurred to me that our taxpayers are being taxed more because of increased appraisal values of 15 percent, so we can pay our bill to the state, which is not for our students,” board President Gina Hinojosa said. “I think it’s contributing to a gentrified state, not just a gentrified Austin, because people can’t afford to live in the city anymore.”

As agreed upon throughout the entire budget planning process, AISD approved a lower tax rate of $1.02 per $100 of appraised value. Nevertheless, property values are expected to continue to increase, and AISD projects it will be required to pay $443 million in local tax revenue back to the state in 2018.

Chart courtesy of the Austin Independent School District.