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School Finance: Learn More About Argyle ISD's Financial Accountability
Christopher Sayler

Argyle ISD is in the midst of experiencing significant growth and has been since 2014. With this growth comes the need for additional instructional space to align with the enrollment growth impacting Argyle ISD.

Since October 2014, Argyle ISD has added more than 1,600 students and is now a large Class 4A school district in the state. Significant growth and facility needs create additional funding required to support this growth and that comes through bond elections. Questions have arisen recently from the community regarding the district's financial stability, debt, land developments and the possibility of future bond elections.

Argyle ISD is releasing a series of informational messages to help provide more clarity to the state of the district financially and the future as it relates to enrollment growth and capital needs. The first of four informational Question-and-Answer communications from Argyle ISD will help provide a look at how school finance operates and the district's history of financial stewardship.

How does the school budget function? 
Public school taxes involve two figures, which divide the school district budget into two “buckets.” The first bucket is the Maintenance and Operations budget (M&O), which funds daily costs and recurring or consumable expenditures such as teacher and staff salaries, supplies, utilities, etc. Approximately 77% of the district’s M&O budget goes toward teacher and staff salaries. Recapture is the primary means by which Chapter 49 school districts send local property tax revenue to the state for redistribution among other districts.

The second bucket is the Interest and Sinking budget (I&S), also known as Debt Service, and that is used to repay debt for longer-term capital improvements approved by voters through bond elections. Proceeds from a bond issue can be used for the construction and renovation of facilities, the acquisition of land and the purchase of capital items such as equipment, technology and transportation. I&S funds are restricted by law and cannot be used to pay M&O expenses. Voter-approved bonds cannot be used to increase teacher salaries or pay rising costs for utilities and services.

What types of revenue does the district receive in the General Fund?
The district’s General Fund is used to pay the district's day-to-day operational expenses. The district receives three types of revenues - local revenues, state revenues, and federal revenues. The primary source of General Fund local revenues is property taxes from the M&O portion of the property tax rate. Some of the additional local revenue sources are athletic revenues, fees from the rental of district facilities, and interest income earnings. State revenues in the General Fund come from the Texas Education Agency with the amount being determined according to the public school finance funding formulas set by the Texas Legislature. Federal revenues in the General Fund are reimbursements from School Health and Related Services (SHARS). 

Regarding financial accountability, has Argyle ISD received recognition for its management of taxpayer dollars?
Yes. Argyle ISD has received an "A" rating for "Superior Achievement" under Texas' School FIRST (Financial Integrity Rating System of Texas) for 18 consecutive years. This rating, released by the Texas Education Agency, is the state's highest rating and demonstrates the quality of Argyle ISD's financial management and reporting systems. The district has also received a "clean" annual financial audit by Hankins, Eastup, Deaton, Tonn & Seay for a minimum of the last five years.  Argyle ISD also has an issuer credit rating of "Aa3" from Moody's Investors Service. This is considered a strong rating and reflects the district's healthy financial services, strong resident income indices, robust home valuations and recent residential development.

In what other ways has Argyle ISD sustained responsible financial management?Financial accountability is included in Argyle ISD's strategic plan and includes the commitment to maintaining a balanced budget over a three-year period. While continuing to account for expected growth, the district has operated within the strategic plan guidelines upholding the commitment during three-year periods.

What is the history of the tax rate in Argyle ISD?
Argyle ISD's overall tax rate during the 2020-2021 school year was the lowest in the past 10 years at 1.41870 and was impacted by the tax compression from House Bill 3 in 2019. HB3 provides more money for classrooms, increases teacher compensation, reduces recapture and cuts local property taxes. The district's overall tax rate has decreased the past two years after it remained at 1.58505 during the 2017-2018 and 2018-2019 school years. The district's Maintenance & Operating Tax Rate (0.93370) during the 2020-2021 school year was also the lowest over the past 10 years. The Interest & Sinking Tax Rate (Debt Service) has remained the same for the past four school years at 0.48500. The I&S rate increases in 2014-2015 and 2017-2018 were a result of voter-approved bond elections.