AISD Weighs Tax Increase

It's been four years since the Austin Independent School District asked voters for a tax increase – four years of statewide cuts and local layoffs. Each year since, the district has discussed holding a tax rollback election, or TRE, and then punted. This year the district has already committed to a long-overdue 3% pay raise for all employees, but it's unsure whether that will come out of savings or taxes. With the clock ticking for the November election, the AISD board of trustees is still equivocating on asking voters to assist them financially.

On June 18, the board approved a preliminary budget for the 2012-2013 school year. So far, expenditures are pegged at $982 million; however, the district only predicts $952 million in revenue, and the board will meet again on Aug. 2 to decide how to span that $30 million gap. Its only options are a tax increase or dipping into savings. If they go with a TRE, that gives them only three months to convince voters to back their request – a burden unique to school districts, as no other local government agency has to go through TREs in order to raise taxes. And any proposal will take a major sales job, especially in Austin, where house prices rise and new buildings go up every day. Unfortunately for AISD, the state's baroque school finance system means local schools see little benefit from that new tax base. Board President Mark Williams said, "I think people still don't understand that."

In 2008, in a heavily Democratic election cycle, former Superintendent Pat Forgione convinced voters to increase property taxes by 3.9 cents per $100 valuation. This year, AISD finds itself trapped between the Legislative devil and the local deep blue sea. On one side are rival local bond proposals: a $400 million wish list from the city, a transportation bond of unknown scale, plus the first financing for a proposed medical school. From the outside it looks like the city, county, and district – fearful of putting too many big-ticket items on one ballot – are stuck in a strange form of election chicken. However, there have been a series of talks between all agencies on how to get the best possible result for all projects. Williams attended the most recent discussion on June 22, which he called "very constructive," as it gives the district a good overview of their plans "versus our ability to get public awareness for our school initiative."

The local balancing act is only half of AISD's deliberations; then there are the unfathomable machinations of the Texas Legislature. The current school finance system collapsed during the last session – leading to massive statewide cuts and layoffs – and now faces multiple legal challenges (see "School Lawsuits Multiply," Nov. 4, 2011). The only political consensus is that there will be school finance reforms next session – whether voluntarily introduced by lawmakers or demanded by Texas courts. Either way, Education Austin President Ken Zarifis called it "naive" to expect the conservative Legislature to help the district. Meanwhile, the district dithers while it bleeds staff to better-paying neighboring districts. He said, "We haven't seen employee pay raises for two years, going into a third, while cost of living has skyrocketed."

If the district does not hold a TRE, the only other option is to dip into the reserves. However, there are three problems with that. First, it further depletes savings – dangerous, when it remains unclear how much the new Legislature will have to fix or fracture the state finance system. Second, it makes the 3% raise a one-off bonus, rather than an actual pay raise. Third, that bonus would not be factored into related payments like pensions. Zarifis argued that the board has publicly accepted the need for a TRE for the last two years but keeps flinching. He said, "Rhetoric isn't going to put money in any person's pocket."

When it comes to finances, AISD always genuflects to the Greater Austin Chamber of Commerce, which has issued its own set of criteria that must be met before it will back a TRE. Two years ago the chamber pulled a neat little dance – not explicitly opposing a rate increase, but instead releasing a statement that it "continues to ask trustees to adopt greater efficiencies – and certainly not to dig a deeper fiscal hole – before considering a tax rate election." (See "Bowing to Business Wheels, AISD Cans Tax Hike," Aug. 27, 2010.) This year, while steering clear of direct criticism of Super­in­tendent Meria Carstarphen, chamber Sen­ior Vice President of Education and Talent Development Drew Scheberle said he was less interested in an across-the-board raise than in seeing finances being applied more tactically. So far, he said, the plans he has seen "are just spreading money across priorities, whether they'll drive student achievement or not."

Scheberle questioned whether a TRE will stand this year. Over the last two years, similar measures have failed in several ISDs around the state, and when Education Austin polled voter support for a TRE in 2010, it only got 56% backing. However, Zar­ifis fired back that it is well past time that the chamber and the board let the voters decide: "Waiting is just going to invite another set of problems. We need the board to have the courage to ask the community what it wants."