A Closer Look at TRE
The Little Elm ISD Board of Trustees has called a Tax Ratification Election or TRE for Saturday, September 5, 2015.Little Elm ISD has proposed a change in the tax rate for the 2015-2016 school year that will require voter approval. It is important to note this will require a restructuring of the tax rate but will not increase the taxes you pay.School districts are funded through different sources: local tax dollars, state funding and federal funding. Local taxes are collected and go into two different funds or ‘pockets’– maintenance and operations or M&O and Interest and Sinking, or I&S. The M&O fund pays for the everyday operations of the District including books, student resources, salaries and building maintenance. The I&S is similar to a mortgage and pays for new facilities for the District which is anticipated to grow more than 1300 students over the next five years. The state of Texas funds school districts based on a series of formulas that take into account our local tax rate; specifically the higher the local M&O tax rate the more funding we receive from the state of Texas. Therefore, each additional dollar generated by the local tax rate on the M&O side yields more funding from the state than a dollar generated on the I&S side.
Our current tax rate is $1.04 on the M&O side and .50 cents on the I&S side for a total tax rate of 1.54 for every 100 dollars a property is worth. That means for a house valued at $100,000, the school taxes would be $1,540 dollars per year. Because the school district wants to raise their M&O tax rate over a 1.04, the state of Texas requires voter approval. By law, the maximum M&O tax rate is $1.17.
That’s where the TRE comes in.
The Little Elm ISD Board of Trustees has called a Tax Ratification Election or TRE to ask the community to consider a change on how the District’s taxes are collected in the M&O and I&S funds to maximize state funding. The proposed change would bring the District an estimated additional 4 million dollars from the state of Texas without increasing taxes.
How is this possible?
The Board of Trustees has set the total tax rate at $1.67. This will be the amount listed on the ballot. If a majority votes **FOR** the $1.67 tax rate adopted by the board, our board has agreed to reduce the I&S tax rate from $.50 to $.37 returning the overall tax rate to $1.54. So basically, voting for the TRE shifts the 13 pennies from the I&S pocket to the M&O pocket.
The reason for moving the 13 pennies from one pocket to the other is that the state of Texas will give Little Elm ISD more state funding for M&O pennies than for the I&S or debt pennies.
This shift in tax pennies will not cost the taxpayer any additional dollars. It will generate an estimated 4 million in additional revenue from the state of Texas. If the pennies don’t change the pocket to which they go, the District will not receive this additional funding from the state.
Based upon this plan, in the upcoming school year there will be no increase in the LEISD tax rate whether the Tax Ratification Election passes or fails.
The bottom line is...
If the TRE passes, Little Elm ISD will receive an estimated additional 4 million dollars yearly and the tax rate will remain a $1.54 for the upcoming year.If the TRE does not pass, the tax rate will be a $1.54 for the next school year but the District will receive no additional funding from the state and will need to seek alternate methods by which to balance the budget.
The District and board of trustees have called the Tax Ratification Election, but the voters are the ones who decide the outcome of the election.
Election day is on Saturday, September 5th at Little Elm High School located at 1900 Walker Lane in Little Elm. Early voting begins Wednesday August 19th and continues until Tuesday September 1st. During early voting, mobile voting sites will be located at various campuses within the District.