1. Dan Casey

2. General Structure of HB 1 Tax Relief Program Adopted in 2006 Compression of 2005 M&O rate is the major vehicle 2006-07: 88.67% ($1.33 for most districts) 2007-08: 66.67% ($1.00 for most districts) 2008-09 and thereafter: Compression percentage determined by Commissioner of Education based on appropriations made to Property Tax Relief Fund Additional four-cent M&O rate increase permitted by school board action (most adopted this rate for 2006) I&S tax rates not affected by HB 1 program Moak, Casey & Associates 2

3. M&O Rates Going into 2007-08 In 2006-07, 529 districts adopted tax rates that were at or above $1.37 All of these districts will face rollback elections if they want to adopt a rate in future years that is greater than their compressed rate plus 4 cents Another 173 districts were within 4 cents of $1.37 last year and are likely to hit the $1.04 barrier in the near future (given the additional compression taking place this year) Moak, Casey & Associates 3

4. Rollback Provisions for ISDs Districts may seek a rollback election up to $1.17 M&O rate for most districts 116 districts have called rollback elections for fall 2007 Most on November ballot Several earlier election dates due to early delivery of certified tax roll Approved by voters to date: Maud, Redwater, Crowell, Whitesboro and Ysleta Rejected by voters: Schulenburg Moak, Casey & Associates 4

5. Rollback Provisions, cont’d. We emphasize to districts that this is a rollback election, not an authorization election Districts cannot get permission to tax above a certain rate and maintain that permission for future years without levying the tax Moak, Casey & Associates 5

6. Districts Holding Rollback Elections Moak, Casey & Associates 6

7. 7 Traits of Rollback-Election Districts Generally small districts in enrollment Other factors: Little value or enrollment growth Low target revenue per WADA—about $300 per student less than state average of $4,919 2005-06 target revenue year for most Indicates that financial need is a major factor in adopting the higher rate and calling the election

8. Rollback Elections: Chairman Eissler “Really what we’re seeing with that is a new way of raising money in school districts that is in partnership with the taxpayers. The state buys down the rate, and if the school district feels that their hold harmless or their growth money isn’t sufficient, then they raise the tax rate. ” -Quorum Report Moak, Casey & Associates 8

9. 9 Public Education Spending “In the absence of funding for property tax relief, funding for the (Foundation School Program) is lower than in the 2006-07 biennium due to strong growth in local school district property values, which results in reduced state obligations.” Source: Legislative Budget Board, Summary of Conference Committee Report for House Bill 1

10. Moak, Casey & Associates 10 General Characteristics of the Funding System Funding increase primarily available through tax rate increases Exceptions based on specific state programs or increases in super penny yields Increases in property values result in lower state funding with one-year exceptions for tax effort above compressed rate Enrollment growth funded

11. Funding Basics for 2007-08 Funding levels depend on 2006-07 final target revenue Best of 2005-06 or 2006-07 under old school finance law at $1.50 rate Third alternative is based on effective tax rate calculation Moak, Casey & Associates 11

12. Basics, cont’d. Revenue levels associated with tax rates Target revenue for compressed rate First 4 cents of optional rate @ $46.94 per penny per student Remainder of optional rate and rollback rate @ $31.95 Moak, Casey & Associates 12

13. Funding Increases for 2007-08 Increased yield for four super pennies (from $41 to $47) $23.63 per WADA for salary increase These two items represent approximately a 1% increase in revenue per student Moak, Casey & Associates 13

14. Our System? (2007-08 school year) Revenue Target: $28.997 billion Tier I (state): $7.245 billion Tier II (state): $1.038 billion Other (state): $927 million Local taxes @ compressed rate: $14.330 billion Recapture: $973 million Hold Harmless: $6.431 billion Moak, Casey & Associates 14

15. Partners Lynn M. Moak Daniel T. Casey Associates Joe WisnoskiAmanda Brownson, Ph.D. Bob Popinski Consultants Kathy MathiasLarry Groppel Thomas Alvis Research Analyst Maritza Kelley Administrative Staff Kari RuehmanSusan Moak Moak, Casey & Associates 15