Richardson | May 2022

EDUCATION Plano ISD could cut programs due to rising recapture bill from state

*PROJECTED NUMBERS THE BILLION-DOLLAR BILL Plano ISD has paid almost $1.2 billion in recapture to the state in the last decade and around $2.43 billion since fiscal year 1993-94. The state has recaptured more than 30% of PISD’s property tax revenues in three of the last four fiscal years. Revenue from property taxes Revenue from state funding Recapture amount Net revenue (property taxes + state funding - recapture)


certain amount of money based on [Texas education code].” District officials said 35% of PISD’s students are classified as econom- ically disadvantaged, and 19% are English language learners. PISD Board Vice President Nancy Humphrey said recapture has become another revenue source for the state. More than 30% of PISD’s property taxes over the last two years were recaptured by the state as excess revenue. “The individual taxpayer has no clue they’re being fleeced like this,” Humphrey said. “There’s no trans- parency in where that money goes.” What can be done While PISD could reduce its recap- ture bill slightly for fiscal year 2022-23 by reducing its property tax rate, Hill said that would also mean losing out on additional state funding. “We give up about $3 million [from the state] for every $0.01 we reduce [the property tax rate],” Hill said. “[As] our deficits are growing, we don’t think we can do that.” Meaningful change to the recap- ture system has long been a top legislative priority for PISD, Stolle said, and it will continue to be until something is done. Among the changes PISD is advo- cating for are limits to recapture rela- tive to a district’s total revenue. PISD officials also want to see districts refunded payments that are not used on education. District officials also said the state should create collection formulas that reflect inflation and differences in cost of living between rural and urban areas. In PISD, Stolle estimated the dis- trict likely has enough money in its accounts to cover one more budget cycle before recapture forces cuts to current school programs. “It’s like paying for your living expenses out of your savings account—you can only do that so long before you have to cut out something from your budget,” Stolle said. “We’ve so far been able to continue offering the programming that we want to offer, but that’s the cliff we see coming up very rapidly.”

After making recapture payments of more than $1 billion to the state over the last six years, Plano ISD officials project the district’s largest bill so far will come next school year. Chief Financial Officer Johnny Hill anticipates PISD will pay nearly $218 million to the state in mid-2023. This year’s payment of almost $213 million is projected to give the district the second largest recapture bill in the state, behind only Austin ISD. Recapture redistributes property tax dollars from property-wealthy districts to those deemed prop- erty-poor by the Texas Education Agency. “PISD has been planning for this day for a long time,” PISD Board Pres- ident David Stolle said of the rising bill. “We are now at the point where [very soon] we are going to have to stop delivering the programs that we currently deliver because we can’t infinitely fund a deficit budget.” For this school year, the PISD board approved a budget that had $19.6 million more in expenses than in revenue. The district tapped its fund balance to cover the difference. The decline in PISD’s student enrollment over the last several years combined with rising property tax revenues due to Plano’s strong housing market have been the main drivers for the district’s increasing recapture payments, Hill said. As PISD has had to do for the last several years, Hill said he anticipates another deficit budget will be put in place for fiscal year 2022-23. “There’s no inflationary factor built into our budget, so ... all of that additional tax collection is simply being collected by the district and being sent on to the state,” he said. “That’s why our deficits [are] going up and up and up.” Following the money One of the biggest misconceptions about recapture, according to Hill, is that the funds collected by the state benefit schools with lower property wealth levels. “This is just a flat out lie,” he said. “[School districts are] entitled to a

2019 House Bill 3 increased education funding and lowered property tax rates to help ease district payments into the recapture system.










TOP 10 IN TEXAS The 10 school districts that paid the most into recapture during fiscal year 2020-21 made up 60% of the total funds collected by the state. While Plano ISD’s $191 million recapture bill was 31% of its maintenance and operations tax collections, Dallas ISD paid just 6% of its collections, and Wink-Loving ISD paid 83%. % OF TOTAL STATE RECAPTURE % OF MAINTENANCE & OPERATIONS TAX COLLECTIONS SENT TO STATE

Plano ISD 6% 31% $191.9M Houston ISD 7% 11% $197.8M Midland ISD 5% 45% $154.4M Austin ISD 24% 51% $710.5M

of the recapture is made up of 10 school districts 60%

Highland Park ISD 4% 68% $104.7M

Eanes ISD 3% 61% $101.8M

Pecos-Barstow-Toyah ISD 3% 78% $99.4M

of the recapture is made up of 148 other school districts 40%

Wink-Loving ISD 3% 83% $87M

Dallas ISD 3% 6% $85M

Spring Branch ISD 2% 18% $61.2M




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