1. RECAPTURE ON MAY 6 BALLOT
Early voting April 24-May 2

2. HISD is in Recapture
HISD must send local property tax dollars to the state of Texas under Recapture.
Recapture (Robin Hood) legislation was passed in 1993 in an attempt to equalize disparities between property-wealthy and property-poor districts.
Good morning/afternoon. I am _______, principal here at __________.
Today, I would like to talk with you about a very important issue on the May 6 ballot: Proposition 1, which will ask you whether HISD can purchase attendance credits to pay its Recapture obligation.
By now, you have likely heard the word “Recapture” as it relates to state school funding. I’d like to explain what recapture is and how it affects us.
HISD is considered “property wealthy” and is required to make a “recapture” payment to the state under Chapter 41 of the Texas Education Code, commonly known as Robin Hood.

3. How did we get here?
Due to rising property values, HISD’s wealth level per student exceeded the wealth level set by the state – putting HISD in Recapture.
Money sent to the state does not increase funding for property-poor districts. Instead these local funds replace the state’s share of the public education budget.
Current law says if a district’s property wealth exceeds the state-set threshold -- in this case $514,000 per weighted average daily attendance -- a district is considered property-wealthy and must take action to equalize its wealth.
You may ask--- doesn’t HISD have a high-needs student population? We do. Roughly 80% of our students are economically disadvantaged, and 30% are English Language Learners. We have more economically disadvantaged students than any other school district’s total student population. Yet, the state views us as “wealthy,” and we must take action to reduce our wealth through the Recapture system.
The question may arise, “Has the district challenged this system?” Yes, HISD joined with 600 other Texas schools districts to sue the state over school finance after the state cut $5.4 billion from public education in 2011.
In 2016, the Texas Supreme Court ruled that the system was “undeniably imperfect but met constitutional standards.” As a result, the court responded it is the responsibility of the Legislature to make changes to the school finance system.
It should also be noted that the money sent to the state does not increase funding for property-poor districts, but instead replaces and frees up state general revenue to be spent for other purposes.

4. On May 6, voters will be asked HOW the district should pay Recapture
HISD has two options to reduce our wealth: We may either purchase attendance credits, which is essentially making a payment to the state, or reduce our property wealth by detaching commercial property.
HISD has heard from the community that the language on the ballot is confusing. We agree. However, state law requires us to use this specific language.
“Purchasing attendance credits” sounds like a good thing! In this case “purchasing attendance credits” effectively means the district will make a payment to the state of Texas.
For the rest of this presentation, we will frame the conversation around what a vote “FOR” purchasing attendance credits means, versus what a vote “AGAINST” purchasing attendance credits means.
Early voting is April 24 to May 2, 2017
General election is Saturday, May 6, 2017

5. Didn’t we already vote on this?
Yes, in Nov HISD voters voted AGAINST “Purchasing Attendance Credits” or writing a check.
Since then, circumstances have changed: TEA’s actions and other factors reduced HISD’s current Recapture obligation from $162 million to $77.5 million AND decreased future Recapture obligations. This helps HISD.
But first, you may be wondering – didn’t we already vote on this?
Yes, but a few things have changed since this issue was first presented to voters last November.
First, TEA has taken action, reinterpreting the way the agency calculates Recapture, reducing the district’s obligation this year and in future years. Why did TEA take this action? Houston ISD, like many districts in the state, offers a 20% local homestead exemption on the full appraised value of every home. Previously, when TEA calculated a district’s wealth level, they did not adjust district wealth for this exemption.
As a result, school districts subject to Recapture that offer this exemption were seen as wealthier than they were, and were paying Recapture on property taxes they never collected. Districts, including HISD, have questioned TEA’s calculation methodology in the past. As a result of continued conversations with HISD and other Recapture districts, TEA announced it will change the way it calculates property wealth, taking into account 50% of the local homestead exemption. This change in methodology reduced our Recapture obligation by about $60 million this year and will continue to reduce our payment in future years.
The outcome of the November election also led to conversations in Austin. Before the November election, some state officials did not believe school finance was a priority, and they were not talking about the subject. Now, these conversations are happening in Austin. The governor mentioned school finance in his State of the State address, and the Senate is now talking about school finance.
The vote began a conversation among legislators in Austin. However, no additional funds have been approved.
The Board called a new election for May 6, 2017.

6. What happens if we vote FOR Purchasing Attendance Credits
What happens if we vote FOR Purchasing Attendance Credits? (Write a check)
HISD will pay our Recapture obligation by writing a check to the State comprised of local property taxes.
The district will continue to make annual Recapture payments, and if our total tax collections grow, that will help offset those payments. If total tax collections do not grow, there will be less of an off-set.
No matter which way voters decide, HISD is subject to Recapture. The state views the district as property wealthy, and we must pay our Recapture obligation. The May 6 ballot initiative will determine HOW HISD will make this payment,
A vote “FOR” will mean that HISD will collect taxes on the properties in our district and then “write a check” to the state to pay our Recapture obligation.
The district will continue to make annual Recapture payments for the foreseeable future, but if our total tax collections grow, they will help offset those payments. If total tax collections do not grow, there will be less of an off-set.
A vote FOR Purchasing Attendance Credits will give the district more capacity in the future to fund schools.
A vote FOR Purchasing Attendance Credits will give the district more capacity in the future to fund schools.

7. What happens if we vote AGAINST Purchasing Attendance Credits
What happens if we vote AGAINST Purchasing Attendance Credits? (Detachment)
Detachment of the district’s most valuable non-residential, commercial property from HISD’s tax rolls.
The properties will be reassigned to Aldine ISD, which will collect taxes on the property.
Unless the law is changed, HISD will permanently lose the revenue from those businesses used for maintenance, operations and paying back debt issued to build schools.
A vote “AGAINST” is not a vote against meeting the district’s Recapture obligation. Instead, if voters choose NOT to purchase attendance credits, the district’s most valuable commercial properties will be assigned to another school district, in this case Aldine ISD, for taxing purposes.
These properties would then pay property taxes to another district, and HISD would no longer collect taxes on these properties. As a result, HISD will be less property wealthy, and this is how we will reduce our property wealth to “pay” our Recapture obligation. This is the most painful way to pay our Recapture obligation because of how it impacts our budget and taxpayers long-term.
If detachment occurs, the district will have less capacity to fund schools. If voters vote AGAINST purchasing attendance credits, TEA will begin detaching about $8 billion worth of our most valuable commercial property. Currently, the impacted areas are in the Galleria, downtown and Greenway Plaza. The amount of property detached would increase every year. Next year, $22 billion worth of property could be detached.
However, the state gets our local property tax dollars in both scenarios. A vote FOR purchasing attendance credits and a vote AGAINST purchasing attendance credits (detachment) are both ways to reduce the district’s wealth to meet our Recapture obligation. We are in recapture whether we vote FOR or AGAINST purchasing attendance credits.
If detachment occurs, the district will have less capacity to fund schools.

8. Which option costs more overall? Detachment
If voters vote “FOR” purchasing attendance credits, the district will maintain all of the commercial property within the District’s boundaries. Over time, these properties will likely increase in value.
As these properties increase in value, our Recapture obligation--- the amount we pay--- will also increase. However, our total tax collections will also increase. As long as our property values continue to grow as they have, HISD projects we will collect more in property taxes than we must pay in Recapture.
In contrast, if voters vote “AGAINST” the purchase of attendance credits, the District will lose detached properties, and these properties will be assigned to Aldine ISD. There is no way in current law to regain these properties.
Over time, the detached properties will also increase in value, and the District will lose all of the growth in property tax collections associated with the loss of these properties.
The loss of growth in property value is analogous to giving away your 401K or retirement account. If you gave away your retirement account, you would lose the value of the account today AND all of the interest you would earn in the future.
In HISD’s case, detaching commercial property will mean we lose the benefit of property value growth among these properties, producing a significant financial loss for the district.

9. How does the vote impact the property tax rate in HISD?
Under both scenarios, the HISD tax rate may increase to keep teacher pay competitive and pay for fixed cost increases.
However, a vote AGAINST Purchasing Attendance Credits (Detachment) may result in a higher tax rate over the next two to three years because the District will have less property to tax.
The district may choose to raise taxes for a variety of reasons, and a tax increase is possible under both ballot options.
However, if property is detached, HISD may need to raise taxes in the next few years. This is because, as mentioned, we will lose the taxes we collect to pay our debt if property is detached.
HISD still must be able to pay back the debt on our schools, and thus may need to raise taxes to be able to afford these payments.

10. How will Detachment affect who pays taxes?
As more and more commercial properties in HISD are detached, a larger percentage of the responsibility of funding public education in Houston shifts from a relatively equal responsibility between commercial and residential properties to more residential properties.
Currently, residential properties make up about half of the property taxes in HISD.
However, only non-residential, commercial properties can be detached to meet a district’s Recapture obligation.
As HISD’s property values continue to grow, TEA would need to detach additional properties to equalize wealth in the district. As a result, the district’s tax base would increasingly be made up of residential properties, who would be responsible for funding education in HISD.

11. How do you want HISD to pay its Recapture Obligation?
On May 6, voters will decide how HISD will meet its Recapture obligation.
In either scenario, HISD will continue its efforts to fix the state’s school finance system.
Early voting is April 24 to May 2, 2017
General election is Saturday, May 6, 2017

12. TO LEARN MORE, VISIT: HoustonISD.org/Recapture