Financial Accountability
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Financial Accountability
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 & Operations 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.
ARGYLE ISD DEBT MANAGEMENT
What is Argyle ISD's Interest & Sinking (debt service) tax rate?
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 (.47000) and 2017-2018 (.48500) were a result of voter-approved bond elections and both remained under the I&S tax rate cap of 50 cents.
What causes a district to take on debt for construction?
Very similar to an individual who needs to borrow money to construct a home, school districts borrow money to build schools. Most families simply do not have the available funds to build or purchase a new home without a mortgage. This same concept also applies to school districts. School districts simply do not have the financial resources available to pay for large capital expenditures (building new schools, renovating schools) without taking on debt.
What has the district done to pay off debt?
The district has actively managed its outstanding debt profile. Argyle ISD has executed seven refinancings and one cash prepayment over the last 11 years, generating approximately $17.5 million in gross debt service savings. When interest rates are low or decline, a family will often refinance their home mortgage to take advantage of these lower interest rates. Much like that family, Argyle ISD has prudently managed the district’s outstanding voter-approved bonds.
What can cause Argyle ISD to have increased debt?
Argyle is like many fast-growth districts across the state. While managing rapidly growing enrollment, the debt profile is elevated to address capital projects needed to provide educational learning space for additional students. As Argyle ISD’s enrollment grows, the debt ratio will decline and will fluctuate over time based on growth and capital project needs. Also, the ratio of debt and student enrollment numbers are not figures the state examines regarding a district’s financial accountability.
Is the District's Interest & Sinking tax rate subject to recapture?
No, the district's I&S tax rate is not subject to recapture. The district keeps 100% of the property taxes collected from I&S or debt service portion of the district's tax rate.
ARGYLE ISD BOND HISTORY
What is a bond election and how are bond packages built?
School districts are required by state law to ask voters for permission to sell bonds to investors in order to raise the capital dollars required for projects such as the renovation to existing buildings or building a new school. Through this, voters are giving permission for the district to take out a loan and pay that loan back over an extended period of time, much like a family takes out a mortgage loan for their home. A School Board calls a bond election so voters can decide whether or not they want to pay for proposed facility projects. Bond packages are built by a committee that is made up of parents, teachers and community members. The committee studies the district’s demographics, finances, current facilities, instructional priorities and community expectations in building a bond package to recommend to the School Board.
When was Argyle ISD's last bond election, and what was included in the package?
Argyle ISD's last bond election was in May 2017. Voters approved a $166 million bond that included Phase II of Argyle High School, Argyle West Elementary, Elementary School #3, a new Transportation Center and Administration Building. The bond also included new buses and renovations and updates to Argyle High School, Argyle Intermediate and Hilltop Elementary. AHS Phase II opens in August, ES #3 is scheduled to open in the 2022-2023 school year, the Administration Building is expected to open in late 2021 or early 2022 and the Transportation Department is in the planning process. AHS/Hilltop construction updates are being done this summer and most of the work at AIS will start next year. Voters approved a 2014 bond for $45 million that included a middle school and $10 million committed to athletic construction and upgrades.
What are the possible future capital needs of the district?
According to the district’s demographers, Argyle ISD will need additional capacity at the elementary and middle school grades (Pre-K-8th) within the next four years. Argyle ISD will have three elementary schools in 2022-2023, but will need additional space by the 2024-2025 school year, per the enrollment growth projections with a large number of students coming from the Harvest and Canyon Falls communities. As far as middle school growth, the district would need a second middle school by the 2025-2026 school year. Argyle ISD currently has one middle school, which is the former high school on Highway 377. While this campus does provide additional capacity for a middle school, the rate of growth will see the campus reach maximum capacity by the 2025-2026 school year with a projected 1,390 students in grades 6th-8th. Additionally, these campus considerations do NOT factor in the possibility of a Furst Ranch enrollment impact.
With the current and future enrollment growth and resulting capital needs in Argyle ISD, what is the potential for a future bond election?
Due to the current enrollment forecast and facility needs to provide instructional space, Argyle ISD would possibly seek a bond election in May 2022. This process would include a community-based committee, approved by the School Board, constructing a bond package during the fall of 2021. The bond package built by the committee would be presented to the School Board for approval of calling a bond election.
What has the district done to pay off past bonds?
The district has actively managed its outstanding debt profile. Argyle ISD has executed seven refinancings and one cash prepayment over the last 11 years, generating approximately $17.5 million in gross debt service savings. When interest rates are low or decline, a family will often refinance their home mortgage to take advantage of these lower interest rates. Much like that family, Argyle ISD has prudently managed the district’s outstanding voter-approved bonds.
