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McAllen ISD considers tax ratification election

May 9, 2018 GMT

McALLEN — School district officials here are reaching out to the public for feedback on possible plans to place a tax ratification election before voters this fall.

The measure would levy more pennies from its tax rate to cover maintenance and operations needs.

The election, known as TRE, would allow the McAllen school district to leverage more funding from 11.5 pennies out of its total tax rate of $1.155 per $100 valuation, using them to fill a void left by expiring disaster funding.

Public school district funds that come from tax collections are divided into two buckets: Maintenance and operations, known as M&O, and interest and sinking, known as I&S. Districts are allowed to levy a maximum of $1.04 of the tax rate for M&O, while the rest is used for I&S, which serves to pay off school district bond debt.

TREs are the only avenue for school districts to take the M&O portion to the maximum $1.17 allowed, by either increasing taxes or moving cents from one bucket to another. Exceptions are only allowed under disaster situations or pollution control efforts, and TREs are options that about half of Texas public school districts have resorted to.


At the McAllen school district, officials are weighing the option of using the TRE to move the 11.5 pennies from I&S to M&O. Even if the I&S fund is left at zero, the state-matching funds in the M&O bucket would be at a higher rate, explained Assistant Superintendent for Business Operations Lorena Garcia, which allows the district to cover both needs.

“The net effect would be no change to the taxpayer,” Garcia said. “You are still collecting taxes on the same amount of money. … The difference is that if you leave it in the I&S side, the state-matching dollars will only levy about $400,000 versus the M&O side, in which the state will match you almost dollar-per-dollar. That will get you another $7 million.”

This would make up for $14 million of additional funding previously collected from two disaster events in 2015 and 2016 that will not be available in upcoming years, unless there is another disaster situation.

District officials started a public poll on Tuesday, which can be found on the district’s website or in its newsletter, hoping to have at least 10,000 community members weigh in on this option and make recommendations. The poll will be available until May 18, as administrators expect to bring a recommendation to the board by June 11.

The plan, according to district officials, is to keep the district’s tax rate at $1.155. But approving the ratification opens the door for a future increase of the total 11.5 cents without an additional election.

Superintendent Jose Gonzalez said while this is a possibility that would be in the hands of the current and future board, historically the district has strived to keep taxes low.


“We can’t predict the future, but we are saying right now that we are committed to $1.155,” Gonzalez said. “We have a track record for the last nine years. The board has not increased taxes, so history speaks for itself … and in 2016, taxes actually went down.”

McAllen’s tax rate is currently one of the lowest in Hidalgo County, below neighboring school district, such as Mission, which is at $1.35 per $100 valuation, and Sharyland at $1.375. This coupled with not many options for new housing for younger families to move into the land-locked district results in lower tax income overall.

“Despite these challenges, we’ve been performing at a very high level academically, in the fine arts arena, in athletics,” Gonzalez said. “There’s 1,207 school districts in the state of Texas; 58 earned that (postsecondary readiness) distinction. Of those 58, only three had a student population of over 20,000 students and McAllen ISD is one of them.”

The expected $7 million a year is meant to slowly address some of its most pressing facilities needs, which were made evident to the community as the former board went out for a $297 million bond that was turned down by voters in May 2015. These include a continuation of safety and security upgrades, which in the past years has included adding safety doors to most campuses, and to also focus on additional learning spaces, such as laboratories, as well as addressing staff compensation, Gonzalez said.

And while the additional $7 million a year might not fully address every need, officials said this could keep the district from going back to the voters for a tax raise or additional bonds.

“If you were to add them all up, McAllen ISD would outnumber that amount,” Garcia said. “However, it allows us to maintain the pace that we are currently at. In addition, in two years our bond payment will go down, so we can use those monies to take out a maintenance tax note. That’s an option that is available to us where we can borrow additional maintenance tax-supported dollars to continue.”

Once feedback is analyzed, officials will then take the recommendation to the board on whether to hold a TRE in June. If the election is recommended and approved by the board, the plan is to then hold the election on Sept. 8, Garcia said.

Without the additional funds, Gonzalez said the district would have to determine how to increase efforts to cut down costs while maintaining a focus on high academic achievement.

“Our philosophy is we are going to run as lean as we can as a business,” he said. “We are going to utilize our facilities to the maximum, and we are going to staff as lean as we can because that makes good business sense. But, if it didn’t pass, we would have to go even leaner than we would like to go.”