Town Hall on Budget & Taxes March 26, 2019 Turner High School Auditorium

Topics of Discussion How Pearland ISD develops the annual budget Where the District’s revenues come from, including: Impact of property values and tax rate Current State funding elements Impact of enrollment and attendance on funding How a citizen’s property tax bill is calculated How the District spends its funds 2019-2021 Legislative Process Overview PEARLAND INDEPENDENT SCHOOL DISTRICT

Budget Process Overview Planning What do we want to accomplish? How are we going to accomplish it? Preparation Allocate resources to support the goals and objectives established during the Planning phase Board approval and adoption Evaluation Assess performance of each campus, department, and district as a whole Were goals and objectives met? Fundamental part of planning for the next year The District’s budget preparation is part of a continuous cycle of planning and evaluation to achieve the District’s goals. PEARLAND INDEPENDENT SCHOOL DISTRICT

Budget Timeline Nov-Dec Enrollment Projections & Campus Allocations Jan District Budget Kick-Off Meeting Feb-Mar Budget Meetings with Campuses & Departments Mar Budget and Request for Additional Funds Due Budget Review Meetings with Assistant Superintendents Compilation of District-Wide Capital Improvement Plan Mar-May Board Budget Workshops Jun Public Hearing to Discuss Budget and Tax Rate Budget Adoption Aug Tax Rate Adoption PEARLAND INDEPENDENT SCHOOL DISTRICT

General Operating Fund Revenues PEARLAND INDEPENDENT SCHOOL DISTRICT

Information Required to Prepare Revenue Assumptions School Finance Law/Legislative Outcome Enrollment Projections Student Demographics Attendance Rates Taxable Property Values Tax Rate Tax Collections Other Relevant Factors PEARLAND INDEPENDENT SCHOOL DISTRICT

2019-2020 Projected PEARLAND INDEPENDENT SCHOOL DISTRICT

PEARLAND INDEPENDENT SCHOOL DISTRICT

Average Daily Attendance (ADA) & Weighted Average Daily Attendance (WADA) Last 10 Fiscal Years * FY 19-20 is based on projections; the spike on WADA during 17-18 and 18-19 was caused by an increase on ADA reported for Free & Reduced student counts due to full enrollment coded during September and October 2017 due to Harvey. PEARLAND INDEPENDENT SCHOOL DISTRICT

*18-19 Actual as of February 2019 *19-20 Estimates have not been prepared by the County PEARLAND INDEPENDENT SCHOOL DISTRICT

Breakdown of Local Property Taxes Over 46% of the District’s revenue comes from its local citizens through property taxes The tax rate is comprised of two parts – Maintenance and Operations (M&O) and Interest and Sinking (I&S) M&O General Fund Funds Day to Day Operations I&S Debt Service Fund Can Only be Used to Pay Debt PEARLAND INDEPENDENT SCHOOL DISTRICT

Tax Rate (Per $100 Valuation) Tax Year Fiscal Year M&O I&S Total 2017 2017-18 $1.04 $0.3756 $1.4156 2018 2018-19 $1.06 $0.3556 2019 2019-20 $0.3906 $1.4306 PEARLAND INDEPENDENT SCHOOL DISTRICT

*Includes Current Year, Prior Year, Delinquent, and Penalty and Interest. PEARLAND INDEPENDENT SCHOOL DISTRICT

General Operating Fund Revenue Projection $166 Million based on Current Funding Formulas Revenue (in millions) FY 2018-19 Amended FY 2019-20 Projected Variance Local Property Taxes $80.9 $80.2 -$0.7 Other Local 1.8 0.0 State 82.2 73.6 -8.6 TRS On-Behalf 8.3 Federal 2.1 Total $175.3 $166.0 -$9.3 Fiscal Year 2019-2020 projections are based on an M&O tax rate decrease from $1.06 to $1.04, which reduces local property tax revenue albeit an increase in property values and also decreases State funding. State funding also decreases due to a slight decrease in enrollment and a loss of State Compensatory Education (SCE) counts generated during Hurricane Harvey when all students were coded as “Free & Reduced”. PEARLAND INDEPENDENT SCHOOL DISTRICT

Local vs. State Share of Basic Allotment PEARLAND INDEPENDENT SCHOOL DISTRICT

General Operating Fund Expenditures PEARLAND INDEPENDENT SCHOOL DISTRICT

Information Required to Prepare Expenditure Assumptions Revenue Levels Legislative Mandates District Initiatives Prioritized Needs Staffing Formulas & Needs Salary Increases Benefit Contributions Other Relevant Factors PEARLAND INDEPENDENT SCHOOL DISTRICT

How Much Money is Distributed to Each Campus? Student Enrollment & Staffing The number of students projected to enroll in the fall determines the number of teachers and support staff that each school receives. That is, enrollment translates into staff positions, which translates into salaries and benefits. School Operating Budgets – The money each campus receives for supplies, equipment, and other operating expenses are allocated on a per-pupil basis. Staffing is not paid from campus budget allocations. Elementary & Middle $89.10 Junior High $100.14 PACE $113.94 High School $128.70 PEARLAND INDEPENDENT SCHOOL DISTRICT

Budget Breakdown by Object Fiscal Year 2018-2019 $176.9 Million PEARLAND INDEPENDENT SCHOOL DISTRICT

How is the General Operating Fund Allocated? Fiscal Year 2018-2019 $176.9 Million PEARLAND INDEPENDENT SCHOOL DISTRICT

District & State-Wide Comparison of Budgeted Operating Expenditures Fiscal Year 2018-2019 Source of State Percentages: TEA 2018-2019 Budgeted Financial Data PEARLAND INDEPENDENT SCHOOL DISTRICT

General Operating Fund Summary & Estimated Days in Fund Balance Fiscal Year 2019-2020 Projections (in Millions) Fiscal Year 2019-2020 revenue projections are based on current funding law; projected expenditures are held at current fiscal year levels, with no salary increases and without restoring prior year budget cuts. The $10.9 million deficit is due in large part to reverting the M&O tax rate from $1.06 to $1.04, a slight decrease in enrollment coupled with a conservative growth in property values, and a loss of the additional revenue generated through the SCE counts during Hurricane Harvey. PEARLAND INDEPENDENT SCHOOL DISTRICT

Effect of an Increase to the M&O Tax Rate Fiscal Year 2019-2020 (Estimated) Additional Funding (in Millions) Annual Taxpayer Impact Tax Rate Rate Increase State Local Total $1.05 + 1 cent $1.96 $0.78 $2.74 $23.81 $1.06 + 2 cents $3.92 $1.56 $5.48 $47.62 $1.07 + 3 cents $3.99 $2.34 $6.33 $71.43 $1.13 + 9 cents $4.43 $7.02 $11.46 $214.28 $1.17 + 13 cents $4.71 $10.15 $14.86 $309.51 Notes: Each cent raised in taxes generates $780,000 in local funds and $1.96 million in State funds (up to $3.92 million in State funds, for a maximum of two additional cents). Each cent increase beyond an M&O rate of $1.06 generates an additional $72,000 in State funding. The annual cost of each cent beyond $1.04 for a taxpayer with an average appraised home value of $263,087 is $23.81. PEARLAND INDEPENDENT SCHOOL DISTRICT

Surrounding Area School District Tax Rates for Fiscal Year 2018-2019 M&O Tax Rate I&S Total GALENA PARK ISD 1.2433 0.3300 1.5733 DEER PARK ISD 1.2367 0.3020 1.5387 PASADENA ISD 1.2000 0.2800 1.4800 ALVIN ISD 1.1700 1.4500 PEARLAND ISD 1.0600 0.3556 1.4156 CLEAR CREEK ISD 0.3400 1.4000 FRIENDSWOOD ISD 0.1970 1.3670 PEARLAND INDEPENDENT SCHOOL DISTRICT

Debt Service Fund The Debt Service Fund is used to pay the principal and interest on bonds that we issue to finance construction, renovations, and other capital improvements. PEARLAND INDEPENDENT SCHOOL DISTRICT

Debt Service Requirements PEARLAND INDEPENDENT SCHOOL DISTRICT

Debt Service Fund Tax Rate to Meet Debt Service Requirements Tax Year Fiscal Year Tax Rate Increase/ (Decrease) in cents Updated Projection 2017 2017-18 $0.3756 2018 2018-19 (2.00 cents) $0.3556 2019 2019-20 3.50 cents $0.3906 2020 2020-21 2.00 cents $0.4106 2021 2021-22 2.55 cents $0.4361 2032 2032-33 (23.50 cents) $0.2011 2042 2042-43 (19.28 cents) $0.0083 PEARLAND INDEPENDENT SCHOOL DISTRICT

Calculation of Property Tax Bill PEARLAND INDEPENDENT SCHOOL DISTRICT

How is Your Property Tax Bill Calculated How is Your Property Tax Bill Calculated? Based on Tax Year 2018 Average Market Value of Residences Average Market Value of Residences $263,087 Less: Homestead Exemption (25,000) Total Taxable Value $238,087 ÷ 100 Taxable Value (per $100 of assessed valuation) $2,380.87 × Tax Rate × $1.4156 Total Property Taxes Due $3,370.36 The taxes you pay on your home are part of the local revenues that make up ___% of Pearland ISD’s revenue budget. For 2018-19, the BOT adopted a tax rate of $1.4156 per $1000 of assessed valuation. M&O $2,523.72 I&S $846.64 Pearland ISD grants the state-required $25,000 homestead exemption for all homeowners that apply to the appraisal district for that exemption. Homeowners who are disabled or age 65 or older are entitled by state law to an additional $10,000 exemption. PEARLAND INDEPENDENT SCHOOL DISTRICT

Thank You! Pearland ISD Business Office www.pearlandisd.org/transparency Follow us on Twitter @PearlandBIZ PEARLAND INDEPENDENT SCHOOL DISTRICT