Q: Could the District reduce its Fund Balance to give salary increases to its employees?
A: No. Salary increases are considered recurring costs. Once a commitment is made to raise an employee’s salary, funds must be aside for that purpose until the employee is no longer working for the District. The additional income is also included in the employee’s retirement benefits. Fund Balances should be used for non-recurring costs. For example, a one-time incentive stipend given to an employee is not a commitment for the same level of spending in subsequent years. The District may also use its Fund Balance to address unexpected expenses incurred as a result of an extraordinary event such as a hurricane, fire, property value settlement, lawsuit, etc. Board Policy CA-Local states “In an effort to provide adequate cash flow for its operations, maintain a strong credit rating, and plan for unanticipated extraordinary costs, the District shall maintain in the general fund a minimum unassigned fund balance of at least two and one-half months of average annual operating expenditures.” The District’s average annual expenses is about $6M per month. Based on this level of spending, the District’s Fund Balance should not go below $15M. Projected Fund Balance for the end of the fiscal year is $14M. Therefore, no additional funds are available for other discretionary spending.
Q: Salary increases are important to all employees NOT just teachers. So, is the District looking at compensation for ALL employees?
A: Yes. The District for many years have assured that ALL employees will receive a salary increase if funds are available. No employees are left behind. If adequate funds were not available for an ongoing increase, the District has given its employees a one-time incentive pay. Click here to review a summary of these salary increases and/or incentive pays provided by the District. More emphasis is placed on teachers because about half of the District’s staff is actually teachers. If the TRE passes, the compensation plan will be modified so that all employees will receive an increase. If the TRE does not pass, the District will be unable to provide a short-term relief by reducing its Fund Balance for incentive pay. A reduction to Fund Balance will be a bigger challenge since a major reduction was made to the Fund Balance in 2016-17 due to the loss of local revenues.
Q: We hear a lot about teachers. The administrators appear to focus on the major issues of getting and retaining new or experienced certified teachers to work at PAISD. Does the District understand that paying more money may not solve its problem?
A: Yes, the District has been and will continue to evaluate how to attract qualified staff to work in the District. Major initiatives were developed and included in its Strategic Plan to focus on ways to support employee needs. These initiatives include staff development, employee mentoring programs, compensation and benefit plans, as well as adequate tools and equipment to do the job. The District also closely monitors turnover rates, staffing levels, etc. in order to optimize operations. Employee surveys have been conducted in the past to solicit input from the employees on his/her needs, concerns, etc. The Strategic Plan was another tool used to allow employees and the community to communicate with the District on employee and community needs. Over 70 individuals participated in the development of this Plan. It is a living document which continues to be developed and refined.
Q: How will the TRE affect my taxes?
A: There are several variables which determine your personal impact. For the average Port Arthur homeowner with a home valued at $52,065 last year, the homeowner’s tax will increase from $365 to $418 per year. Keep in mind, a portion of the increase ($16.26) is a result of an increase in the market value for the home. The remaining increase ($37.22) would occur if the TRE passes. With this total increase, the taxpayer would pay about $53.83 annually which is less than $5 more a month. Of the $5 monthly increase, the impact of the tax increase is about $3 per month.
For those who live in a rental home/apartment, there is a zero impact directly. There is a possibility that a landlord might raise the rent to cover the tax increase, as well as for other cost-of-living increases the landlord may incur. The landlord could raise the rent regardless of whether the tax rate is increased or not. The overall increase is so small that the landlord may decide to absorb this business expense.
The TRE will not affect the tax rate for those over 65.
Q: I do not mind paying my fair share, but how is the amount I owed determined compared to the amount a large business must pay?
A: The major factor used to derive property taxes for individuals or businesses is based on the value of property owned. According to the 2016 property values, see the percentages attributed to each group below.
- Industrial (55%)
- Commercial (22%)
- Residential (20%)
- Land (3%)
Q: I heard if the District gets this rate hike, the District will become a Chapter 41 (rich district) who is subject to repay the state millions of dollars.
A: The District is already classified as a Chapter 41 District. This classification is based on the state’s formula which calculates the wealth per student. The first Chapter 41 payment to the state will be due once the refineries’ economic development agreements (Chapter 313) expire and the property values excluded from the tax roll for the M&O tax calculation are added. Therefore, even if the TRE fails, the District will still be subject to pay the state starting in the 2019-20 school year. Approximately $13M will be owed as recapture costs each year.
Q: Why should I pay more just to give it to the state? How is a TRE helping the District?
A: The state formula dictates that the District cannot retain more than what the state deems as its ‘fair share.’ The estimated increase the District would receive of $5.9M is net of any recapture costs.