1. 1 LISD Budget & Tax Hearing August 23, 2004 Presentation by: R.J. Barber, Ed.D. Superintendent Jesus J. Amezcua, CPA Chief Financial Officer Rudy Sanchez, RTA Tax Assessor - Collector

2. 2 Executive Summary LISD receives moneys from three major sources: 17% Local Taxpayers – money used to match State Funds 82% State of Texas Grants 1% Federal Funds – Competitive Grants

3. 3 Total General Fund Revenues by Major Source LOCAL$ 27,059,920 STATE 128,863,341 FEDERAL 913,000 TOTAL$156,836,261

4. 4 Moneys from the Local Taxpayer Via Appraisal Values from the Appraisal District Tax Rate set by Board of Trustees LISD must pay the first 86 cents of the education of a student and the rest are enrichment funds that match state dollars through tier 2 funds

5. 5 Let’s Analyze our Tax Rate for M&O.86 cents required by the State for Tier 1.462291 Enrichment Match to bring in 83% in State funds [Max is.64 cents] 1.32291 Total tax rate for last year Note: Many districts DO NOT have this many pennies left. In fact, this is one of the reasons for West Orange Cove Lawsuit.

6. 6 Where are we from the $1.50 CAP? Tax rate since 1993 1992-1993$0.8683 1993-1994$1.0350 1994-1995$1.0350 1995-1996$1.0000 1996-1997$1.0239 1997-1998$0.9837 1998-1999$1.02628 1999-2000$1.22291 2000-2001$1.28291 Nov 2001 $1.50 New Cap 2001-2002$1.32291 2002-2003$1.32291 2003-2004$1.32291 Note: Robin Hood Started in 1993, Another Reason for West Orange Cove.

7. 7 What are the revenues set? Values x Tax Rate x collection rate = [($1,552,188,980 x $1.4741)/100 + $779,792] x 92% collection rate = $21,767,904 Amount necessary to generate: (1).86 required match AND (2) enrichment enough to cover the total cost of educating 24,000+ children

8. 8 Where are the Appraised Values? 1992-1993 1,165,027,413 1993-1994 1,203,400,429 1994-1995 1,283,385,896 1995-1996 1,346,689,990 1996-1997 1,269,001,135 1997-1998 1,313,353,144 Note: Robin Hood Started in 1993, Another Reason for West Orange Cove. 1998-1999 1,329,307,098 1999-2000 1,359,509,407 2000-2001 1,391,120,115 Nov 2001 $1.50 New Cap 2001-2002 1,430,691,752 2002-2003 1,492,399,445 2003-2004 1,681,169,772

9. 9 Net Taxable Values

10. 10 Taxable Values Taxable Value from previous years Minimum growth of ~ $40 million/year Taxable Value increase 2004-2005$ 1,681,169,772 2003-2004 1,492,399,445 Increase of$ 188,770,327

11. 11 Moneys from the State of TEXAS LISD Receives Revenues from: Tier I = Foundation Funds – These are Basic Allotment and includes: Regular Funds……………………………….. $56,329,225 State Compensatory…………….15 Weight $11,633,235 Bilingual Funds ………………….10 Weight $3,591,750 CATE Funds……………………..35 Weight $3,069,073 Special Ed Funds………... Various Weights $11,994,785 Gifted & Talented …………………………… $372,514 Transportation ………………………………. $429,563 Part of the General Fund = $12,248,824

12. 12 Moneys from the State of TEXAS LISD Receives Revenues from: Tier 2 = Enrichment Funds $41,298,542.5933 out of 64 cents Part of the General Fund $20,699,369 Depends on local tax effort the first year of biennium

13. 13 Moneys from the State of TEXAS LISD Receives Revenues from: Tier 3 = IFA $7,884,394 & EDA $2,326,320.1512 tax rate for Debt Service to generate required payment match from local revenues of $2,400,000 Part of the Debt Service $2,232,734 Targeted at.1512 cents at 92 percent.

14. 14 Biennium and 8 to 1 dollars Legislature meets on Jan 1999 1999-2000(Sets Max) 2000-2001 Legislature meets on Jan 2001 2001-2002(Sets Max) 2003-2004 Special Session May 2004 Legislature meets on Jan 2005 (West Orange Case on going) 2004-2005 (sets Max) 2005-2006

15. 15 What is our current max? Max set in 2001-2002: $18,458,579 Max proposed for 2003-2004: $20,699,369

16. 16 When setting the tax rate, we need to consider the following: Appropriation Needs Salaries Programs Etc… Values Tax Rate CAP Collection Rate Partners Values and Collections Cost per WADA for LISD and Partner

17. 17 LISD Appropriations Needs are: 2003-2004 $143,646,640 2004-2005 $152,924,281 Increase of $ 9,277,641 Reduction in Fund Balance of $3,988,748 Target Fund Balance at the end of Year $11,858,509

18. 18 PFC issues and impact to General Fund Paid through Maintenance & Operations Call to repay in 10 years and move it to Debt Service – 5 cents Good Rating necessary to reduce interest cost Fund Balance of at least 1 to 2 months is necessary to sell bonds and have them insured. No State Guarantee One or more bond sales Negotiated Sale

19. 19 How does this budget affect the General Fund Balance?

20. 20 Taxable Values Average increase in the last 10 years is $40 million 2004 values = $180 Million OR 400% increase IMPLICATIONS: More Local Dollars, More State Dollars, Less WADA Money next year only. The following year, the District will get less state dollars and will have to increase the rate to meet the.86 cent match.

21. 21 Why increase taxes in the following year? For 2004-2005, LISD is using the 2003 tax values for State Minimum Match (.86 cents) For 2005-2006, LISD will use the 2003 values which means that state dollars will be reduced then. Let’s Look at the template…

22. 22 Implications of $180 Million in values GENERAL FUND: More in Local taxes: $504,046 More in State dollars this year: $2,241,133 Less in WADA funds: $2,214,000 ONLY if Partner district decides that other districts are more attractive than LISD in terms of Cost per WADA

23. 23 Implications of $180 Million in values GENERAL FUND: Cost per WADA was $4,101 with Prelim. Values NEW Cost per WADA is $4,183 MORE in State Funds $82 x 27,000 LOSS: $82 x 27,000 = $2,214,000 $7,537,000 less $2,214,000= $5,323,000

24. 24 Impact to Cost per Wada VariableIncrease = GainDecrease = Gain LISD ValuesWada Up = LessWada Down = Up LISD Rate or Collections Wada Up = LessWada Up = Up Partner Values Their cost per Wada Up = More Their cost per Wada Down=Less Partner Rate or Collections Their Cost per Wada Up = More Their cost per Wada Down =Less These assume that the partner variables and enrollment remain the same.

25. 25 WADA Considerations Deer Park ISD Example 7,500 x $200 = $1,500,000 7,500 x $83 = $622,500 Gain is = $877,500

26. 26 Considerations Reduce the tax rate and continue WADA Contracts [ Cost of WADA = $4,100 ] Keep the tax rate and loose some of the contracts [ Cost of WADA = $4,183 ] 83 x 27,000 = $2,241,000

27. 27 Implications of $180 Million in values DEBT SERVICE FUND: Local taxes Needed: $2,453,234 State dollars this yr: $10,210,714 Less rate required at 92% of values: $.1512 Reduction in I&S rate of $0.0286

28. 28 Debt Service Fund  Increase in Taxable Values of over $180,000,000  3¢ Tax Rate reduction due to values to meet Debt Service Payments

29. 29 Presentation by Tax Assessor Collector / on values Values: Improvements:$69 M Exemptions: $111,206,897 M Laredo Medical Center: $108 M HEB –South: $3.2 M Current Year 2003$1,492,399,445 Certified 2004 $1,681,169,772 Variance$ 188,770,327

30. 30 Presentation by Tax Assessor Collector Current Rate Rollback Rate Effective Rate (Not required) Proposed Rate M&O $1.32291 1.36641.3064$1.32291 I&S $.1798 0.1512$0.1512 Total $1.50 $1.51$1.47411

31. 31 Summary Preliminary Budget Prelim- Values $80 Million $1.54 3 cents in M&O 1 cent in I&S WADA Cost $4,100 WADA Gain $5.9 M Option Budget # 1 Certified Values $180 Million $1.4741 No change in M&O and 2.8 cent reduction in I&S. WADA Cost $4,183 State Gain and Loss $2,214,000 Local Gain $531,179 Loss $2.214,000 in WADA K Preliminary Values

32. 32 Option Budget # 2 = $1.4641 One cent reduction in M&O and 2.8 cents reduction in I&S 3.8 cents reduction WADA Cost - $4,156 Gain in State of $2,726,888 More Local Funds $293,380 Options Option Budget # 3 = $1.4591 Two cents reduction in M&O and 2.8 cents reduction in I&S 4.8 cents reduction WADA Cost - $4,142 Gain in State of $2,416,304 More Local Funds $225,964

33. 33 Basis for Recommendation $180 Million unprecedented increase WADA K are maintained at 1.4741 cents reduction. Reduction in Fund Balance is minimized LISD to rely on WADA gain to balance the budget Possible increase in the future for PFC = 5 cents Possible increase due to.86cent Min match in 2005 Collection rate of 92% due to increase in values Reduction in value for I&S of 2.8 cents

34. 34 Summary: What to look for? For 2005-2006: Maintain a conservative look at salaries: $1,500 teachers 3% for other employees This means: $3,200,000 in new money. $1,500,000 Furniture Money for new schools $4,700,000

35. 35 Summary: What is the next step? Adopt the budget Adopt the tax rate M&O$1.32291 I&S $0.15120 Total $1.4741

36. 36 Comments???