Denton ISD eyes 1-cent tax hike

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School board weighs increase to district’s debt service tax rate

The Denton school district is proposing a 1-cent increase to the debt service portion of the tax rate, which would take the debt service rate to the state’s 50-cent cap.

The district is also proposing a general operating fund budget that includes a nearly $4.7 million shortfall. Balanced budgets are projected for the debt service and child nutrition funds.

A public hearing laying out tax rate and budget proposals for the upcoming fiscal year was held at last week’s school board meeting. The Denton school board is expected to adopt the new fiscal budget, which takes effect July 1, at its next meeting June 24 and set the district tax rate in September.

Tax rate

Under the proposal, the debt service tax rate would rise to 50 cents per $100 property valuation, up from 49 cents. Fifty cents is the maximum rate that school districts can ask homeowners to pay toward debt service.

The 1-cent tax rate increase would add $10 to the annual tax bill for a house valued at $100,000. School district officials project the 1-cent increase would generate an additional $5.2 million in property tax revenue compared to the current fiscal year.

Both district officials and board members have argued that a 1-cent tax rate increase would fund projects approved in a bond package last November and also generate enough revenue for paying off the district’s debt sooner.

One person opposing the tax hike is Denton resident Kenneth Stout. At Tuesday’s public hearing, he suggested the school district lease out property it has purchased for future school sites to generate more revenue.

“I don’t approve of a tax, even a 1-cent increase,” he told board members. “If new growth doesn’t take care of it, we the taxpayers don’t need it.”

According to Debbie Monschke, the district’s executive director of budget and finance, weekly updates on property valuations from the Denton Central Appraisal District indicate a preliminary $2 billion increase in property values in the school district. But as property owners protest their assessed values, valuations will decline, she said.

Based on trends over the last several years, Monschke projects a $600 million valuation increase for the proposed budget. Certified values will be known in July.

“We are very conservative in all our projections, and if the numbers are better, it gives us flexibility to meet additional needs that maybe weren’t covered in the [original] budget,” she said.

To remain at the current debt service tax rate and still cover the district’s debt obligations, the district would need to see valuation growth of $270 million to $300 million, Monschke said.

Board President Glenna Harris calls the proposed 1-cent tax increase a “step of fiscal responsibility.” She said it would allow the district to prepay debt and pay off balances faster, which could “save taxpayers a whole lot in interest costs” and free up bond capacity.

“By going up to the 50 cents, it actually helps us save taxpayers money,” Harris said. “Because we ... pay down early, that allows us to get a better bond rating, which means we get a lower interest rate on bonds, and that saves the taxpayers, too.”

General operating budget

The district’s general fund supports daily operations and payroll expenses.

According to what is proposed for the fund, expenses are projected to total $212 million and estimated revenue generated to support the fund is estimated to total more than $207 million, resulting in a budget shortfall.

Personnel costs and expenses to open Adkins Elementary School this August in the Lantana area make up the bulk of the deficit.

District officials have designated more than $2.8 million of next year’s fiscal budget for a compensation plan for all school employees, for which they’ll soon seek the board’s approval.

Costs associated with the opening of Adkins Elementary total nearly $863,000 — $739,000 for the equivalent of 13.5 staff positions and $123,830 for custodial and grounds expenses.

“To keep the opening costs to a minimum ... they’re consolidating and bringing in teachers and faculty from other schools,” where enrollment for the new school year is projected to decline, said Sharon Cox, a district spokeswoman.

Expenses for the 2014-15 fiscal year reflect a $3.8 million increase in comparison to the current fiscal budget.

Harris and district officials have both said they anticipate offsetting the deficit with reserves, which as of last year had $60 million of its $73.6 million balance undesignated.

“I think we have a pretty conservative budget,” Harris said. “We are hopeful that [with] the increase in property values ... that there will be minimal impact on the taxpayer.”

To view documents for the proposed tax rate and budget, visit http://bit.ly/1ndu0Cl.

BRITNEY TABOR can be reached at 940-566-6876 and via Twitter at @BritneyTabor.


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