Next Tuesday, Lake Travis Independent School District voters will head to the polls to decide a referendum that would give the district 2 cents of additional tax revenue.

LTISD Superintendent Dr. Rocky Kirk attempted to explain how school finance works and why this current referendum before voters is so crucial to the district. He spoke to the Lake Travis Chamber of Commerce during its monthly luncheon at the Lakeway Resort and Spa.
“On Nov. 3, Lake Travis ISD residents will go to the polls to vote on a tax referendum.” Kirk said. “What makes this tough to discuss is the fact that school finance has become so difficult to get across that their eyes glaze over when trying to explain it.”
But Kirk said it was essential that he attempt to explain why the 2 cent election is crucial to LTISD’s future.
“I don’t think we have ever had one in Lake Travis,” Kirk said. “A tax ratification election is triggered because the budget that the school district sets for the upcoming school year cannot be covered — or funded — with the tax rate that was in place the prior fiscal year. So on Aug. 27, our board adopted a budget, and the tax rate that was in place last year was not sufficient to cover that budget. That triggers the tax ratification election. Voters have to go to the polls and vote yes or no. If the voters say yes, then we are in pretty good shape. If the voters vote no, then the tax rate rolls back to the previous year’s. We will have to dip into our reserves and fund balance to cover the shortage.”
In fact, the school district dipped into reserve funds the previous year to avoid a tax increase.
The Texas Legislature designed its most recent school finance plan to include such referendums, which if passed, would not be subject to recapture. Recaptured money, often referred to as “Robin Hood,” has been mired in legal challenges and court rulings for decades, but remains the state’s funding mechanism for schools. Many school districts across Texas have been holding similar elections to garner unrecaptured funds. Austin ISD voters approved the same kind of tax referendum last year.
According to Kirk, the 2 cent in additional taxes would represent just under $5 per month to the average homeowner in LTISD.
“I went fishing last summer and spent a lot of time thinking about how to explain this to our residents,” Kirk said. “I understand these are challenging fiscal times and the last thing a lot of people want is any kind of tax increase.”
But Kirk said there were key considerations the district needed to do and maintain the highest quality school district possible.
“Robin Hood is alive and well,” Kirk said. “I hear ‘I thought Robin Hood was dead and gone,’ just about everywhere I go. We did take part in the school finance lawsuit. We did prevail all the way to the Texas Supreme Court [which again declared the funding system as unconstitutional].
“Unfortunately, the way the legislature chose to fix the school finance fiasco we are involved in had nothing to do with doing away with Robin Hood,” he continued. “The property rich school districts are still giving their tax dollars to the poor districts.”
LTISD sends approximately $30 million a year to other school districts from its locally-collected tax dollars, as mandated by the Texas Legislature — regardless of what the Supreme Court ordered.
“We send 50 cents of every dollar collected in our school district back to the State of Texas,” Kirk said. “It’s just the way it is.”
Kirk said when the legislature “fixed” the funding system, it merely gave a fixed income for every student in the district.
“They didn’t index that money with the thought of inflation, or mandated teacher raises, the increasing costs of fuel and all the rest of the things that eat into a budget,” Kirk said. “So over time, that fixed income has caught up with us.”
In fact, former LTISD Assistant Superintendent Bob Hart, who handled the district’s finances, warned school trustees shortly after the legislature’s change to the finance system that it would force the school district into the red.
Kirk said the “Permanent School Fund,” created in 1854 when the state sold some of its land back to the federal government, is part of the problem. The fund, through investments over the years, now has $23 billion.
“That is important, because the Permanent School Fund is what is used to guarantee the bonds we go out an sell when we have a bond election,” Kirk said. “The problem is that the Internal Revenue Service has not allowed the state to go out and increase the capacity that it use to have to guarantee bonds. When that was in place and the state had a AAA bond rating — which is the best you can have.
“Well, we [school districts] can no longer rely on that, so we have to use what is called our underlying bond rating,” he continued. “In Lake Travis, we have a bond rating of AA+. Let me put that into perspective of what it means to our school district and its underlying financial integrity. There are 1,050 school districts in the State of Texas. We are one of seven districts in the state to have a AA+ bond rating. That is the highest rating Standard and Poor gives to school districts.”
Kirk said LTISD is still growing and that 200 more kids joined the district this year than its demographer had predicted.
“Perhaps some kids who were in private schools are now in public schools due to the economy — that may explain part of it,” Kirk said. “But I think people look around and realize that we have a really good school district where their children can get a good education.”
LTISD’s demographer predicts the number of students could top 20,000 within 20 years. Facing growth and needing to purchase land for new schools is paramount for the district.
Kirk made reference to a chart [above] that showed the district that without the 2 cents, the district will be in the red with no fund balance whatsoever by 2013. With the 2 cents, the district could stave off the problem for a bit longer. Kirk is hopeful that the legislature will deal with the funding issue by that point.
“The thing about these 2 pennies is that Robin Hood cannot get his hand in our pockets on this one,” Kirk said. “But if this is the kind of shape we are in, and we have the best bond rating possible, then other school districts will be in much worse shape than we are. I don’t know what their answer is, but our answer is that while we have a chance, we need to ask the voters to put off as long as we can, where we are heading.”
Kirk said 86 percent of the school district’s budget is tied up in payroll — teachers, administrators and support staff. He said that under the circumstances, without help from voters, the district would be forced to cut its staff — including teachers.
“When you cut the staff, you kill programs,” he said. “When you kill programs, you hurt kids. That’s the bottom line. I believe that this community understands that we have invested a lot to make a good district and we should try to hang on to what we have as long as we can.”
The district has picked up a number of critical endorsements for the 2 cents, including a nod from the Lake Travis Chamber of Commerce.
Polling sites for LTISD’s Tax Ratification Election are: Precinct 306, Lakeway Justice Center, 104 Cross Creek Drive; Precinct 308, Briarcliff POA Community Center, 22801 Briarcliff Drive; Precinct 312, Travis County Sheriff’s Office at Hudson Bend, 3800 Hudson Bend Road; Precinct 316, Travis County Parks Office, 14624 Hamilton Pool Road; Precinct 319, Lakeway Activity Center, 105 Cross Creek Drive; Precinct 320, The River in The Hills Church, 1310 Ranch Road 620 South, Ste. C-9 (Lakeway Plaza); Precinct 324, Lake Pointe Elementary School, 11801 Sonoma Drive; Precinct 346, Serene Hills Elementary School, 3301 Serene Hills Drive (in Lakeway); and Precinct 359, Hudson Bend Middle School, 15600 Lariat Trail.