School Finance 101School Finance Overview •Total Statewide FSP Entitlement in FY 2019 •5.13 million students in Average Daily Attendance •Growing ~65,000 students per year •$47.64

School Finance 101DANIEL WEST, CHIEF F INANCIAL OFFICER

DUMAS ISD

APRIL 9 , 2019

School Finance OverviewThe 2 biggest components in school revenues are local property tax collections, and funding from the State of Texas.

Local tax revenues are tied to property values determined by Moore County Appraisal District and the State Comptroller’s Office.

State revenues are determined based on the Average Daily Attendance of students in the District, as well as property tax collections for the prior year.• Foundation School Program• Establishes how much state funding school districts are entitled to receive.

• Formulas are set in statute, and they consider both student and district characteristics including the number and type of students enrolled, district size and geographic factors, and local taxable property values and tax rates.

• Generally, once entitlements are established, the formulas are used to determine how much a district can generate locally (localshare) through property taxes before making up the difference with state funds (state share).

School Finance Overview

State Share Decreases

As Local Share Increases..

School Finance Overview•Total Statewide FSP Entitlement in FY 2019• 5.13 million students in Average Daily Attendance• Growing ~65,000 students per year

• $47.64 billion (state and local) for FSP M&O• Maintenance & Operations

• $6.94 billion (state and local) for FSP I&S• Interest & Sinking

•State Funding is broken out into 2 Tiers• Tier One

• Tier Two• Level 1

• Level 2

Maintenance and Operations Tiers•Tier One

◦ The basic allotment is currently $5,140 per student and set in statute

◦ $5,140 has been the per student amount since 2016

◦ Dumas ISD’s basic allotment is $5,542 per student◦ Mid-Sized District adjustment

•Tier Two• Provides for enrichment funding to supplement Tier One funds

• Currently tied to Austin ISD property values (currently skyrocketing)

School Finance OverviewSummary of Finance Template

School Finance Overview

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5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Revenue and Fund Balance

Local State Federal Total Fund Balance

Texas school district funding source percentages

34.7%

3.3%52.2%

9.8%

FY2007

State Recapture Local Federal

39.3%

2.2%

45.9%

12.6%

FY2012

State Recapture Local Federal

36.6%

2.8%50.2%

10.3%

FY2017

State Recapture Local Federal

DISD Tax RatesMaintenance & Operations Tax

◦ Provides funds for maintenance and operations of the district

◦ Includes salaries, technology, supplies and materials, library books, extra-curricular expenses, vehicles, transportation costs, maintenance, operations, custodial, and some capital outlay expenditures

Interest & Sinking Tax◦ Provides funds for payments on the debt that finances district facilities

◦ Bond payments for:◦ Facilities

◦ Vehicles

◦ Technology

DISD Tax Rates2018 Tax Rates

◦ M&O - $1.0400 per $100 valuation

◦ I&S - $0.1079 per $100 valuation

◦ Total Tax Rate - $1.14790 per $100 valuation

◦ DISD tax rate comprises 49% of total tax rate for Dumas and Cactus residents

◦ DISD is also the second largest employer in Moore County, employing over 710 full-time employees

DISD Tax Rates

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0.10000

0.20000

0.30000

0.40000

0.50000

0.60000

0.70000

0.80000

0.90000

1.00000

1.10000

1.20000

1.30000

1.40000

1.50000

-

0.10000

0.20000

0.30000

0.40000

0.50000

0.60000

0.70000

0.80000

0.90000

1.00000

1.10000

1.20000

1.30000

1.40000

1.50000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

DISD Tax Rate History

M&O I&S Total

DISD Tax Rate Comparison, Statewide• DISD ranks 855 out of 1,018 taxing Independent School Districts in Texas

• 84% of districts in Texas tax at a higher rate than DISD

DISD Tax Rate Comparison, Statewide

0 50 100 150 200 250 300 350 400 450 500 550 600 650 700

$1.17+

$1.11 - $1.16

$1.05 - $1.10

$1.04

$1.01 - $1.03

< $1.00

M&O Adopted Tax Rates 2008 vs. 2018

2008 2018

DISD Tax Rate Comparison, Statewide

0 50 100 150 200 250 300 350 400 450

$0.61+

$0.51 - $0.60

$0.41 - $0.50

$0.31 - $0.40

$0.21 - $0.30

$0.11 - $0.20

< $0.10

I&S Adopted Tax Rates, 2008 vs. 2018

2008 2018

DISD Tax Rate Comparison, Area•Dumas ISD ranks 30th out of the nearest 40 school districts in Texas when comparing total tax rate.

Adrian ISD Dumas ISD Lefors ISD Spring Creek ISD

Amarillo ISD Fort Elliott CISD McLean ISD Stratford ISD

Booker ISD Friona ISD Pampa ISD Sunray ISD

Borger ISD Grandview-Hopkins ISD Panhandle ISD Texhoma ISD

Bushland ISD Groom ISD Perryton ISD Texline ISD

Canyon ISD Gruver ISD Plemons-Stinnett-Phillips CISD Vega ISD

Channing ISD Happy ISD Pringle-Morse CISD Walcott ISD

Clarendon ISD Hartley ISD River Road ISD Wheeler ISD

Claude ISD Hereford ISD Sanford-Fritch ISD White Deer ISD

Dalhart ISD Highland Park ISD Spearman ISD Wildorado ISD

DISD Tax Rate Comparison, Area

0 5 10 15 20 25 30 35

$1.17+

$1.11 - $1.16

$1.05 - $1.10

$1.04

$1.01 - $1.03

< $1.00

M&O Adopted Tax Rates, 2008 vs. 2018

2008 2018

DISD Tax Rate Comparison, Area

0 5 10 15 20 25 30

$0.61+

$0.51 - $0.60

$0.41 - $0.50

$0.31 - $0.40

$0.21 - $0.30

$0.11 - $0.20

< $0.10

I&S Adopted Tax Rates, 2008 vs. 2018

2008 2018

DISD Tax Rate Comparison, AreaCurrent Rates – Tax Information Page

2008 Series Bond•In November 2008, DISD called a bond election for $25,000,000 for the construction of a new Intermediate School Campus.

•The bond passed, and multiple projects were included within the scope of that program.• New Intermediate School Campus

• Science wing addition to DHS

• Science wind addition to DJHS

• Technology and projector upgrade for each classroom

• PPCD Addition at Morningside Elementary

• District-Wide HVAC replacement

•Throughout the course of the construction program, Dumas ISD also transferred $10MM of its fund balance to cover additional costs that the bond amount could not cover.

2008 Series Bond•Voters of DISD approved the bond as follows:• FOR – 1,304

• AGAINST – 445

• TOTAL VOTES – 1,749

•Current Bond Status:

DescriptionInterest Rate

PayableOriginal Issue

Amount

Amount Outstanding

07/01/18 Retired

Amount Outstanding

04/09/19

General Obligation Bonds

Series 2008 Unlimited Tax School Building Bonds 3.6% - 5.0% 25,000,000 1,330,000 1,330,000 -

Series 2015 Unlimited Tax Refunding Bonds 2.0% - 4.0% 8,355,000 8,250,000 8,250,000

Series 2016 Unlimited Tax Refunding Bonds 2.0% - 4.0% 8,400,000 8,285,000 45,000 8,240,000

17,865,000 1,375,000 16,490,000

TOP 10 TAXPAYERS

Name Property Type2018 Taxable

Valuation % of Freeze Adjusted Net

Taxable Valuation

Diamond Shamrock Refining Refinery - Energy 271,442,550 14.92%

JBS USA LLC (Swift) Meat Packing Plant 107,468,420 5.91%

Valero Marketing & Supply Oil & Gas / Pipeline 99,075,680 5.45%

Faria Land TX Genrl Prntnrship Dairy 49,760,660 2.74%

Scout Energy Management Oil & Gas / Pipeline 45,070,370 2.48%

Pantera Energy Company Oil & Gas / Pipeline 37,277,150 2.05%

Eagle Rock Field Services Pipeline 30,989,630 1.70%

BNSF Railway Railway 30,989,630 1.70%

JBS USA Food Co - Cactus Plant Meat Packing Plant 26,551,610 1.46%

Southwestern Public Service Co Electric Utility 24,023,890 1.32%

722,649,590 39.73% % of freeze adjusted taxable value

Freeze Adjusted Taxable Value = 1,819,017,731

Tax Rate Impact AnalysisAs a preliminary analysis we had our Financial Advisors, SAMCO Capital Markets, run Tax Rate Impact Analyses on various bond amounts. The analysis assumed the following:

◦ No property value growth or decline

◦ 97% tax collection rate

◦ 4.5% presumed interest rate

The Impact Analysis was done with $50MM as a starting point, increasing in $10MM increments to $100MM

The following table outlines the bond amount, and the impact that it will have on the tax rate.

Tax Rate Impact Analysis

Bond Amount

$50MM $60MM $70MM $80MM $90MM $100MM

Tax Rate Increase 0.17270 0.20730 0.24180 0.27640 0.31090 0.34540

Current Tax Rate 0.10790 0.10790 0.10790 0.10790 0.10790 0.10790

Total Debt Service 0.28060 0.31520 0.34970 0.38430 0.41880 0.45330

M&O Tax Rate 1.04000 1.04000 1.04000 1.04000 1.04000 1.04000

Total Tax Rate 1.32060 1.35520 1.38970 1.42430 1.45880 1.49330

% Increase 15.04% 18.06% 21.06% 24.08% 27.08% 30.09%

Tax Rate Impact AnalysisAnnual Tax Increase

Bond Amount

Home Value $50MM $60MM $70MM $80MM $90MM $100MM

50,000 86 103 120 138 155 172

89,869 154 185 216 247 279 309 **

100,000 172 206 241 275 310 344

150,000 257 309 361 413 465 517

200,000 343 412 481 550 620 689

250,000 429 515 602 688 774 861

300,000 515 618 722 826 929 1,033

350,000 601 721 842 963 1,084 1,205

400,000 686 825 963 1,101 1,239 1,377

450,000 772 928 1,083 1,239 1,394 1,550

500,000 858 1,031 1,203 1,376 1,549 1,722

** Average Home Taxable Value in DISD

Tax Rate Impact AnalysisMonthly Tax Increase

Bond Amount Home Value $50MM $60MM $70MM $80MM $90MM $100MM

50,000 7 9 10 11 13 14

89,869 13 15 18 21 23 26 **

100,000 14 17 20 23 26 29

150,000 21 26 30 34 39 43

200,000 29 34 40 46 52 57

250,000 36 43 50 57 65 72

300,000 43 52 60 69 77 86

350,000 50 60 70 80 90 100

400,000 57 69 80 92 103 115

450,000 64 77 90 103 116 129

500,000 71 86 100 115 129 143

** Average Home Taxable Value in DISD

Tax Rate Impact AnalysisDiscuss potential tax rates and comparison.

Bond Basics•Uniform Election Dates• Section 41.001 of Election Code establishes Uniform Election Dates for School District Bond Elections

• First Saturday in May in an odd-numbered year

• First Saturday in May in an even-numbered year, for an election held by a political subdivision other than a county

• First Tuesday after the first Monday in November

•Deadlines for calling bond elections• Section 3.005 of the Texas Education Code establishes time period for calling an election

• For an election to be held on a uniform election date, the election shall be ordered not later than the 78th day before election day

•Requirements for the order calling the election• Must be called by resolution of the Board of Trustees• State specific contents for the proposal• Establish dates and locations for early voting• Advertising and Public Notice requirements• Specific proposition and ballot language

Recent Legislative Initiatives•FAILED (but will likely return)• Minimum voter turnout requirements

• Moving all bond elections to the November uniform election date

• Adding tax rate impacts and other financial information such as total principal and interest on debt outstanding to the ballot

• Requiring each project to be covered in a separate proposition

Recent Legislative Initiatives•Governor Abbot’s Property Tax Policy Proposal• Requiring a 2/3 supermajority vote to approve issuance of debt

• Adding voter turnout requirements

• Adding debt information to the ballot• Amount of debt currently outstanding

• Current debt service payments

• Current per capita debt obligations

• Estimated debt service on the new debt

• Estimated per capita debt burden