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Pleasanton ISD The Basics of School Finance

Pleasanton ISD The Basics of School Finance. Presented by Omar Garcia, BOSC, Inc. September 9, 2014. Levels of M&O Tax Rate. Compressed Tax Rate PISD’s compressed tax rate is $1.00 “Golden” Pennies (maximum = 6)

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Pleasanton ISD The Basics of School Finance

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  1. Pleasanton ISDThe Basics of School Finance Presented by Omar Garcia, BOSC, Inc. September 9, 2014

  2. Levels of M&O Tax Rate • Compressed Tax Rate • PISD’s compressed tax rate is $1.00 • “Golden” Pennies (maximum = 6) • PISD has 4….would have to have a TRE to get remaining 2 (M&O tax rate would have to be $1.06) • “Copper” Pennies (max = $1.17 – (Compressed Rate + 6)) • PISD has none

  3. The Basic Program (Tier I) Regular Ed Allotment + Special Ed Allotments + Career & Tech Ed Allotment + Bilingual Ed Allotment + Compensatory Ed Allotments + Gifted &Talented Ed Allotment + Transportation Allotment + Public Education Grant Allotment + High School Allotment Total Cost of Tier I

  4. The Basic Program (Tier I) • Question: Who pays for the Total Cost of this basic program? • Answer: PISD’s compressed rate of $1.00 goes towards paying for that cost • The state will pay for the rest 2014-15, estimated: PISD’s Tier I cost = $23.1M PISD’s $1.00 raises $17.6M ($1.76B in prior-yr value x $1.00) State pays the remaining $5.5M (called Tier I state aid)

  5. The Basic Program (Tier I) 2015-16, estimated: PISD’s Tier I cost = $23.1M PISD’s $1.00 raises $22.1M ($2.21B in prior-yr value x $1.00) State only pays $1M

  6. The Basic Program (Tier I) 2016-17, estimated with only a 10% growth in value PISD’s Tier I cost = $23.1M PISD’s $1.00 raises $24.3M ($2.43B in prior-yr value x $1.00) State pays $0

  7. The “Enrichment” Program (Tier II) • The “Golden” Penny Level: • Each of PISD’s 4 pennies is guaranteed to bring in $61.86 per WADA in 2014-15 Guarantee = $61.86 per penny per WADA PISD raises $40.44 per penny per WADA (using prior-yr value) State matches with $21.42 per penny per WADA (State matching is called Tier II state aid)

  8. The “Enrichment” Program (Tier II) • 2015-16, estimated: Guarantee = $61.86 per penny per WADA PISD raises $50.81 per penny per WADA State matches with $11.05 per penny per WADA • 2016-17, estimated with only a 10% growth in value Guarantee = $61.86 per penny per WADA PISD raises $55.83 per penny per WADA State matches with $6.03 per penny per WADA

  9. The “Enrichment” Program (Tier II) • The “Copper” Penny Level: • PISD has no pennies at this level but this level works the same way as the golden level, but the guarantee is only $31.95 per penny per WADA 2014-15, estimated: Guarantee = $31.95 per penny per WADA PISD raises $40.44 per penny per WADA (using prior-yr value) No State matching • PISD could only keep $31.95 per penny per WADA and the $8.49 per penny per WADA “excess” would be recaptured

  10. The Facilities Program • The state has 2 programs to help districts meet their facilities debt • Existing Debt Allotment (EDA) • Instructional Facilities Allotment (IFA) • Each I&S penny levied is guaranteed to bring in $35 per ADA • PISD no longer qualifies for either program 2014-15, estimated: Guarantee = $35.00 per penny per ADA PISD raises $54.19 per penny per ADA (using prior-yr value) No State Matching and no recapture on I&S

  11. Chapter 41 (Recapture) • Two levels of recapture • 1st level is applied to the district’s compressed tax rate • 2nd level is applied to the district’s “copper” pennies • No recapture on the “golden” pennies • 1st level begins at $504,000 in wealth per WADA (2014-15) • 2nd level begins at $319,500 in wealth per WADA – TEA uses this level to label a district as Chapter 41 • PISD’s estimated wealth per WADA (again using prior-yr value) in 2014-15 is $404,449 so therefore PISD will be labeled a Chapter 41 district

  12. Chapter 41 (Recapture) • Just because a district is labeled Chapter 41 does not necessarily mean it will have to pay recapture • PISD ‘s wealth per WADA in 2014-15 is below $504,000 so therefore, the 1st level of recapture does not apply • PISD’s wealth per WADA in 2014-15 is above $319,500 but it has no “copper” pennies , so therefore, the 2nd level of recapture does not apply • PISD ‘s wealth per WADA in 2015-16 will be slightly above 504,000 ($508,140) so therefore, the 1st level of recapture will apply

  13. Chapter 41 (Recapture) • In 2016-17 (estimated using 10% growth factor) • PISD ‘s wealth per WADA will be well above $504,000 ($558,257, estimated) so therefore, the 1st level of recapture will apply • Amount of recapture calculation for 1st level: Wealth per WADA Allowed = $504,000 PISD’s Wealth per WADA = $558,257 “Excess” Wealth per WADA = $54,257 Percentage “Excess” = 10.8% • Means that for every $1.00 raised at the district’s compressed rate, $.108 will be recaptured (district will keep $.892 of every dollar)

  14. The Cost of a Bus: M&O vs I&S • In 2016-17 when recapture is more significant: Price-tag on bus = $100,000 If paid for with I&S tax rate, cost would be $100,000 (no recapture on I&S side) If paid for with M&O compressed tax rate, cost would be $112,108 factoring in 10.8% recapture ($112,108 x .892 = $100,000)

  15. When Boom Goes to Bust • For example, if values were to decline dramatically beginning in tax year 2015:

  16. My Contact Info • Email: ogarcia@boscinc.com • Phone: toll-free 855-243-5917 • Cell: 512-565-7005

  17. BOSC, Inc.’s Specialized Texas School District Finance Team • Since the financial operations of Texas school districts are unique and the fiscal challenges/solutions are different from other municipal entities, BOSC, Inc. formed its “Texas School District Finance Team” to provide comprehensive and specialized financial services to Texas public school districts. Ryan O’Hara Managing Director, Texas Public Finance 1401 McKinney Street, Suite 1000 │ Houston, Texas 77010 E-Mail: rohara@boscinc.com Direct: 713.289.5898 │ Mobile: 713.584.5788│ Fax: 713.354.0258 Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Alison M. Long Investment Banker, Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas 75080 E-Mail: alison.long@boscinc.com Direct: 214.576.0881 │ Mobile: 254.744.4555 │ Fax: 214.576.0890 Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC William J. Gumbert Head of Municipal (Tier I) Sales, Trading and Underwriting Managing Director, Co-Director of Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas 75080 E-Mail: bgumbert@boscinc.com Direct: 214.576.0880 │ Mobile: 214.212.3153│ Fax: 214.576.0890 Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Mike Jolly Investment Banker, Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas 75080 E-Mail: mjolly@boscinc.com Direct: 512.868.1980 │ Mobile: 512.751.0479│ Fax: 214.576.0890 Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Dr. Cathy Bryce Investment Banker, Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas 75080 E-Mail: cbryce@boscinc.com Mobile: 214.477.5972│ Fax: 214.576.0890 Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Joshua M. McLaughlin Managing Director, Co-Director of Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas 75080 E-Mail: jmclaughlin@boscinc.com Direct: 214.576.0878 │ Mobile: 972.897.0503 │ Fax: 214.576.0890 Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Omar Garcia Investment Banker, Texas Public Finance 333 West Campbell Road, Suite 350 │ Richardson, Texas 75080 E-Mail: ogarcia@boscinc.com Direct: 512.243.5917 │ Mobile: 512.565.7005 │ Fax: 214.576.0890 Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC Allen Mattson, CFA Senior Vice President | Manager, Municipal Underwriting and Trading 333 West Campbell Road, Suite 350 │ Richardson, Texas 75080 1200 N. Mayfair Road, Suite 303 │ Milwaukee, Wisconsin 53226 E-Mail: amattson@bokf.com Direct: 214.576.0872 │ Mobile: 203.556.1808 Securities offered by BOSC, Inc., Registered Investment Advisor, a registered Broker/Dealer, Member FINRA/SIPC

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