Districts Use Tax Rate Election for People, Programs

In early 2023, officials at fast-growing Forney ISD, located about 25 miles east of Dallas, were watching and waiting to see what was going to play out at the state Capitol. The district had the facilities it needed to handle its more than 16,000 students, thanks to two successful bond elections in 2019 and 2022. Now, it was time to support its teachers and staff with pay increases.

Like so many school districts across the state, Forney ISD’s officials were hoping the Legislature would provide much-needed funding for public education. But as time passed without any funding legislation imminent, they began considering the “what ifs.” What would the district do if the per-pupil allotment were to remain stagnant? How would it fund salaries as inflation continued to eat away at its fund balance?

The answer for the district was a Voter-Approval Tax Rate Election, or VATRE, said Kristin Zastoupil, Forney ISD’s executive director of marketing and communications. The district looked at neighboring districts in North Texas and found that about 80% had already successfully passed a VATRE.

“We talked with our staff and said, ‘Hey, here’s the situation we’re in and the per-pupil funding allotment is not necessarily going to go up, so this is an opportunity for us to claim money that’s potentially being left on the table for our students, for classroom programming, and for staff salaries,’” Zastoupil said.

Why VATRE?

As more and more Texas school districts are faced with approving deficit budgets and funding challenges, a VATRE may be one way to secure revenue designated specifically for people and programs.

A VATRE is triggered when a board adopts a tax rate that exceeds the district’s voter-approval tax rate (VATR). The VATR is determined for each district by a statutory formula and is the highest tax rate a board can adopt without holding an election. A district’s adopted tax rate has two components: the district’s debt service rate, or its interest and sinking (I&S) rate, and its maintenance and operations (M&O) rate.

While a bond election authorizes the issuance of bonds to generate funds for a district’s buildings and infrastructure and to be repaid from I&S revenue, a VATRE approves an increase in the district’s M&O tax rate, which can only be used for items related to programs and people, such as teacher salaries and stipends, training programs, educational programs, and other student activities, such as extracurricular programs.

Staying Competitive

Like Forney, Lockhart ISD was among the more than 50 school districts across Texas that held a VATRE in the November 2023 uniform election. And of those districts that pursued a VATRE, 85% successfully passed, according to data from the Texas Association of School Business Officials (TASBO).

Lockhart ISD, located about 25 miles south of Austin, has a student population of about 6,700 — the 16^th largest enrollment among Austin area independent school districts. When Superintendent Mark Estrada realized early in 2023 that his district was going to lose a significant amount of state funding — about 5% of the district’s operating budget — due to changes in the state’s assigned property values, he and his district’s leadership team began to consider a VATRE.

“We knew that we had no other option if we wanted to give a raise [to teachers] and accomplish some school security things that we needed to do and that were being mandated by the state without the necessary funds,” he said. “We saw an opportunity to strategically work with our community and for them to invest in our district. So, the timing was very critical.”

Board Support

For Lockhart ISD, the November 2023 election wasn’t the first time the district attempted a VATRE. In fact, in the November 2022 uniform election, the district had a VATRE on the ballot, but it wasn’t successful.

“We knew that we were going to have a fight to get this to pass [in 2023] because we had already had one fail,” Estrada said.

The process of building support began with outreach to the district’s leadership team and the board. Those conversations with leadership included about 50 people, including his cabinet, directors, principals, and assistant principals, Estrada said.

“We had to make sure that we had board support before that August,” Estrada said. “Because if there was going to be any buy-in — if we couldn’t get the support of the board to pass a higher tax rate than allowed, which triggers the election — then that was going to be problematic.”

Estrada took the spring and summer to educate the board, making sure they understood the objectives and outcomes of approving the higher-than-allowable tax rate.

“I think part of getting them on board was really showing them side by side [comparisons],” he said. “If we don’t pass this, this is what our revenue and budget look like and this is how dire that situation is versus, if we go forward and it passes, how does that change our budget and potential revenue? And what does that allow us to do?”

Building that board support also allowed Estrada and his team the time they needed to ensure trustees had a basic understanding of how public education funding works in Texas, which is complicated and can be confusing even for the most well-versed in finance, but having a clear understanding is critical when answering to constituents and stakeholders.

“Because board members have a fiduciary responsibility to their community when making these decisions, board members should ask questions and make sure they understand what the VATRE is for and why the district is doing it,” said Kristi Clark, chief policy officer at TASBO.

Beat the Clock

At Forney ISD, officials were hopeful that based on the recent bond elections, which passed with strong support, the VATRE would also get community backing, Zastoupil said. But officials also knew the VATRE would require a different approach for community outreach.

Even before a district can begin to do community outreach and education, it must meet several very strict timelines and deadlines to get a VATRE on the November ballot, Clark said. “You can’t do it last minute,” she said. “You have to have your ducks in a row well in advance.”

From hiring an auditor by early July to conduct an efficiency audit to publishing the newspaper notice for the budget and tax rate meeting, adopting the budget and tax rate, and ordering the VATRE in August, there are deadlines that, if not met, will blow a district’s chances to have the election, Clark said.

“It’s easy for any district to miss an essential step or deadline,” Clark said. “And I think the reason we heard about more districts missing something is because more districts were doing it or trying to do it.”

Community Education

Once the board votes on the tax rate and orders the VATRE, the district will need to begin the work of educating the community, Clark said.

At both Lockhart and Forney ISDs, the districts began reaching out to civic organizations, holding community meetings to inform and educate the public about their upcoming elections.

At Lockhart ISD, the district held meetings at different times of the day — morning, lunch, and evening, Estrada said. They had a calendar of events planned through Election Day with activities to engage the community and educate them about the VATRE proposal, which included social media posts and videos. In addition, a political action committee was also promoting the measure.

“That was a big help,” Estrada said. “Really focusing on and providing clarity to the community, so it’s not that we’re just asking for money, we’re asking for money for the specific things that we must have.”

And those specific items included teacher salaries, which the district was able to compare with neighboring districts, and school security upgrades. “We just focused on those two things and committed to our community,” Estrada said.

At Forney ISD, the district took a similar approach to community outreach, sharing presentations with community groups, using social media posts, sharing insightful videos, and providing pertinent information on its website. But the district also knew this election would be different than its prior bond elections, Zastoupil said.

Changing Tactics

After COVID, it was more challenging to get people to participate in focus groups or even to attend public meetings, so the district had folks go out and knock on doors and bring the information directly to voters, Zastoupil said. That allowed voters to ask questions and the door knockers were ready with answers. There was also a personal connection created in the process.

Forney ISD also took a different approach when communicating information or talking with voters. Unlike the district’s previous bond elections, when voters asked, “What will you do if it doesn’t pass?” Zastoupil said, the district’s response was always affirmative; that the district has faith that voters would make the best decision. But with the 2023 VATRE, the district made clear what might happen.

“We said, you know what? So, what happens if this doesn’t pass? If this doesn’t happen, we’re going to have to come back to our community and ask you, ‘What would you like us to begin to prioritize?’” she said.

They shared the programs that might need to be cut, such as fine arts, athletics, and career programming, which included its cosmetology program, she said.

They also shared the impact of inflation on the district and that just like voters, the district pays water and electric bills, yet since 2019, there’s been no increase to the per-pupil funding allotment, she said.

“That really hit home for people because everybody in the room understands inflation,” Zastoupil said. “They understand I’m paying more at the grocery store. I’m paying more when I go buy things. My bills are more. And that was very eye opening for our community to understand that ‘Oh, you guys are actually doing a whole lot more and battling this inflation rate with no more money.’”

Waiting Game

In some ways, 2023 was an outlier. Because tax rates went down and the homestead exemption increased, longstanding property tax frustrations were abated. Consequently, districts’ requests for tax increases were more palatable to voters, Clark said. That may not be the case in 2024, which is one reason districts should consider whether they might encounter opposition and how they will prepare to educate voters.

While districts like Forney ISD and Lockhart ISD were able to take advantage of a VATRE in 2023, many other districts throughout the state — that anticipated the Legislature taking action — are now faced with making difficult decisions while working with deficit budgets.

One such district is Corpus Christi ISD, which adopted a $25 million deficit budget in 2023-24.

“Our board always wants to explore every option,” said Karen Griffith, Corpus Christi ISD’s deputy superintendent of business and support services. “It is important to them to demonstrate to the community that they have exhausted all other options before requesting VATRE support and explaining why it is needed.”

With inflation hitting everyone hard, no school board wants to put more strain on its community when the state Legislature should be providing funding for education, she said, adding that she worries there won’t be any state-level relief this year and anticipates districts like hers will face higher deficit budgets in 2024-25.

In the meantime, the district is looking at all cost-saving options including, like many districts, the savings potential that could be realized by closing some of its older, low enrollment schools and consolidating those students in newer, more energy-efficient modern schools.

“We may have some tough decisions depending on what the Legislature decides next year,” Griffith said. “We are just like many in the state trying to find ways to cut spending. At the same time, you don’t want to do it at the risk of student achievement, especially when we’re making gains.”

Courageous Action

Estrada said he hopes districts won’t let obstacles hold them back from pursuing a VATRE.

“I do think that, for boards and superintendents, this is an opportunity to be courageous,” Estrada said. “Let the community decide, put it out there and let them decide. Like I said, we had one fail, and there are a lot of people who said, ‘It already failed. There’s no way it’s going to pass again.’ And we put it on the ballot for the community to decide if they wanted to invest in the district. And because of that, it passed.”

Zastoupil said that while there may be more challenges for districts attempting a VATRE in 2024, it still comes down to preparation.

“It may change some of their key messaging, as they’re presenting those key informational messages,” she said. “But at the same time, the planning, the approach, making sure you’re educating people and sharing facts, those good bones of that informational campaign don’t change.”

The biggest challenge is providing clarity to voters because the school funding formula is so complex, “and it doesn’t make logical sense,” Estrada said. “I think the more we’ve been able to educate our community on how it actually works, the more support we get because they see that it’s a broken system and they see the inequities of the state system.”

Photo: Members of the Forney ISD Political Action Committee prepare to distribute yard signs in advance of the November 2023 VATRE.