The Lake Dallas school district is considering a tax rate election in an effort to keep teacher pay rates competitive and help account for increasing expenses and decreasing revenue.

The district is looking at a proposed budget with a deficit of about $895,000 for the 2008-09 fiscal year, said Wes Eversole, assistant superintendent for operations and finance.

Expenses for 2008-09 are estimated at about $27.9 million, while revenue is figured to be about $27 million, he said, adding that the numbers may change because the district is still working on the budget.

District expenses have increased by about $17,000 from the current fiscal year, even with budgetary decreases in almost all departments and campuses except for transportation, payroll and a few others, Eversole said.

The district’s revenue has decreased by a little more than $400,000 partly because interest earning rates are lower, he said.

The district is considering asking for a 13-cent increase from this year’s tax rate.

If that tax rate is adopted at the Aug. 1 public meeting, the board will need to hold an election within 30 to 90 days.

The 2008-09 fiscal year budget, also up for approval at the Aug. 1 meeting, will be reviewed Monday during a regular-session meeting.

If the board adopts the proposed tax rate and the election passes, it could generate about $1.5 million more from property owners, which would be partly matched by about $600,000 from the state, Eversole said.

Superintendent Gayle Stinson said employees of the school district make it great and the district wants to take care of them.

The reasoning for a possible tax rate election is to be more competitive in recruiting and retaining employees, she said.

“If this [tax rate election] doesn’t surface as we’d like, then we’ll continue to be as efficient as possible in our daily operations, as we are now,” Stinson said.

She and Eversole said they feel that the state has put the district in its current position.

Eversole said the district has been tightening its belt for many years while still providing quality education.

State funding is based on the district’s weighted average daily attendance, which Eversole says hasn’t changed for two years now.

If property values increase in an area, the district gets less from the state to meet the set amount per student.

The district can get more money from property owners if it gets voter approval.

Lake Dallas gets $4,813 per student from the state, which is less than Denton’s average of $5,727 per student and the county’s average of $5,606 per student, according to Eversole.

“It’s [the district’s financial situation] because of the inequities in how we’re funded,” said Eversole.

School board president Sandra Drusch echoed his thoughts.

Drusch said the only surrounding school district getting less money per student from the state is Pilot Point, and it expects to get little or no relief when the Legislature convenes in January.

Attendance is no longer growing, so the district is dealing with a static budget, Drusch said.

The board has spent a great deal of time going over the proposed budget and cutting in every possible way, but with 84 percent of the budget going toward salaries, there are limits to what they can do, she said.

“We could try to nickel-and-dime” and cut out some programs, but it would not really help the problem, she said.

“The fiscally responsible thing to do is to at least take it to the voters,” Drusch said.

If voters approve the 13-cent tax rate increase, the district hopes to raise the starting salary for teachers with a bachelor’s degree from $36,500 to $40,000, said Eversole.

He says Lake Dallas is competing mostly with Lewisville and Denton to retain teachers.

The Lewisville school district’s starting teacher salary for the 2008-09 school year is $44,600; Denton’s is $45,600.

If voters do not approve the tax rate increase, he hopes they can still bring the teachers’ starting salary to $38,000 despite the proposed budget deficit.

Transportation costs have gone up by almost 40 percent, according to the district’s proposed budget, with supply costs — including fuel — increasing by about 67 percent.

Under the proposed transportation budget, fuel is budgeted for $164,000, an increase of $82,000 from the year before.

An air-conditioned school bus is also included in the transportation budget for students attending off-campus events.

The maintenance budget also increased by almost $39,000, which includes some outsourcing for services from some positions that were eliminated.

This will be the second year in a row that the district proposed a deficit budget.

As the fiscal year comes to a close, the district is facing a deficit of more than $470,000, said Eversole, but he said he thinks they’ll be able to the close the gap to about $200,000 because the district has saved in several areas throughout the year.

The district’s general fund would cover the rest of this year’s deficit, he said.

This year’s tax rate is $1.52 per $100 property valuation.

School districts were required by the state last year to reduce their maintenance and operation tax rates to $1 per $100 valuation with the option to add a 4-cent enrichment tax to sustain educational programs.

There is a general 50-cent cap on the debt service portion of the tax rate, set by the attorney general’s office.

The state allows school districts to ask voters to approve up to 13 cents more for the maintenance and operation portion of the tax rate.

It’ll cost the district about $3,000 to $4,000 to hold an election, said Eversole.

If the increase passes, that would bring the tax rate for property owners to $1.65 for the 2008 fiscal year.

That would mean the school tax bill for a $100,000 home would be $1,650, or $130 more than the previous year.

AMY DODD THOMPSON can be reached at 940-566-6876. Her e-mail address is athompson@dentonrc.com.

If you go

What: Lake Dallas school board meeting

When: 5:30 p.m. Monday

Where: Lake Dallas Middle School, Room 401, 325 E. Hundley Drive