Business officials for the Denton school district are determining options for the debt service budget and tax rate after learning certified taxable property values released last month came in below what the district projected when adopting its 2012-13 budget in June.
The school district, which started its fiscal year July 1, adopted a budget June 26, nearly a month prior to certified property values being released by the Denton Central Appraisal District.
The freeze adjusted taxable amount certified and under protest for 2012 totaled more than $9.13 billion, a nearly $303.8 million or 3.44 percent increase from the previous year, according to the appraisal district.
The school district when adopting its budget in June projected a $350 million increase in values.
A freeze adjusted taxable value takes the net taxable value and removes values where properties are frozen, said Rudy Durham, chief deputy appraiser. It is the value the school district uses in projecting its tax revenue.
Debbie Monschke, Denton’s executive director of budget and finance, said the difference in values should have a minimum impact on the district’s maintenance and operations budget, which includes a combination of local, state and federal revenue — a formula calculated from average daily attendance and the amount of local property tax collected. But a school district’s ability to pay its bond debt, which is used to finance construction, equipment or both, comes entirely from local property taxes.
According to district documents, the impact to the maintenance and operations fund is an estimated reduction of $35,825, adjusting the district’s projected budget deficit from nearly $2.86 million to more than $2.89 million.
District officials have said they intend to absorb the district’s shortfall with reserves and additional district revenue anticipated from a projected student enrollment increase.
“We do budget conservatively, and I feel like we can make up that shortage for the [maintenance and operations] side,” Monschke said.
She said she’s working with the district’s financial advisers to determine how the reduction in values will impact the district’s debt service budget and tax rate, which is completely funded by local property taxes.
“We’ll be talking with the board about that in future meetings,” she said.
According to district documents, the lower values, based on a more than 98 percent tax collection rate, represents a $231,866 debt service budget reduction.
District officials now will see a more than $1.6 million fund balance increase rather than the $1.83 million projected in June.
School board President Mia Price in June said the board would look at using the additional funds in reserves to buy down debt.
The district’s current tax rate is set at $1.04 per $100 valuation for maintenance and operations, while the debt service side is 49 cents for a combined rate of $1.53. A compression to school tax rates by the state Legislature in the 2006-07 school year capped school districts’ debt service tax rates at 50 cents.
The school board is expected to adopt the district’s tax rate next month.
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