When House Bill 3 legislation was announced at the end of the legislative session, it was immediately met with excitement, apprehension and some confusion.
There are many moving parts to this landmark education legislation and we are working feverishly to nail down some of the details in order to plan our budget, assess programs and create a compensation plan for our employees. There are many, many individual pieces of this legislation, and I will only address two of them here.
The first is the property values we use for revenue estimates. One of the significant changes in HB 3 involves moving to current-year property values for the calculation of state aid (historically we have used the known value of the previous year). This means districts will need to estimate the property value that will eventually come out of the property value study prior to the adoption of our budget.
Typically, the comptroller certifies preliminary values in January and the final value in August after the close of the relevant school year, which would mean that this value will not officially be available. Assuming this timeline remains, districts will need to estimate this value for the completion of a state aid template.
We believe the property value certified by the comptroller should track reasonably closely with our locally certified taxable property value with a few exceptions. We have been told one reasonable method for estimating the 2019 value would be to go back several years and see whether the percentage increase in the value tracks relatively close to the percentage increase in the local taxable value.
Put another way, if our local taxable value increased by a certain percent between tax year 2017 and 2018, did our final tax roll grow by that same percentage? If so, we can take the percentage increase in your local taxable value between tax years 2018 and 2019 and apply it to the values from 2018 and get reasonably close. This is a significant change from past years, when we have known our property values from the previous year to build our budget.
Estimating this amount leaves us all a bit apprehensive. We are building our models to take into account historical average increases and decreases over the past several years in order to project forward and come up with a reasonable estimate. Since this is the first time we have made these estimates, we will do our absolute best and hope to improve our accuracy over time.
I have had many questions about salary increases as well and this is the second item I want to address. House Bill 3 includes many other changes apart from the increases, including a “do not hire” registry, more robust teacher-mentor program and funding, and optional teacher incentive allotment, and I hope to provide more information about that at a future date.
HB 3 provides for increased funding to school districts, but the amount for Victoria ISD is currently unknown. When the legislature ran the amounts, they miscalculated our current M&O tax rate and thus our estimate is incorrect. At some point we will establish the new revenue coming to VISD and we will publicize that amount when it is known.
We have alerted our local legislators, the Texas Association of School Boards, and the Texas Education Agency. We have not been told when we can expect accurate amounts.
The compensation requirements in HB 3 are broad and give districts significant flexibility in deciding how best to implement pay increases. The few guidelines specified in HB 3 are for each year that the basic allotment increases, districts must spend a minimum of 30% of new funding from the state on compensation increases to full-time district employees other than administrators. It is important to note the word minimum and also important to note the legislation states “compensation”, meaning some of those dollars can be used to offset insurance benefits costs.
Of that 30%, 75% of the new money must be spent on classroom teachers, full-time librarians, full-time school counselors, and full-time school nurses, prioritizing differentiated compensation for classroom teachers with more than five years of experience. Twenty-five% of the new funding may be used as determined by a district to increase compensation paid to other full-time district employees who are not administrators.
We are currently running various scenarios on these two items as we prepare for our Board budget workshops, which will be happening in the next few months leading up to the adoption of the budget. The two big question marks on the revenue side are: 1. A reliable estimate of property values and 2. Our expected new revenue for compensation increases.
Once those are known, we look forward to our conversation about compensation increases for our employees.