Prosper ISD approves lower tax rate for FY 2024-25, adopts deficit budget
The Prosper ISD Board of Trustees unanimously approved a new tax rate of $1.2552 per $100 valuation at the August 26, 2024, Board of Trustees meeting. This is a $.0023 decrease from last year’s tax rate and is the lowest since 2005. See below for a more detailed explanation of how to determine the tax rate.
“We aim for the best in everything we do - from teaching and learning to district operations to managing our local, state, and federal dollars. Our school board and district leaders work together to meet our community's expectations. This means giving all our students what they need to excel while being dollar-wise and transparent with our finances,” said Superintendent of Schools Dr. Holly Ferguson.
During a public budget and tax rate hearing, Chief Financial Officer Michele Seese presented a final budget report to the Board. The Board then unanimously approved the $362.7 million 2024-25 school year budget, with anticipated revenue from local, state, and federal sources of $347.2 million, resulting in a deficit budget of approximately $15.4 million.
WHY DID THE BOARD ADOPT A DEFICIT BUDGET?
“This budget was based on an estimate of 29,992 students for Average Daily Attendance (ADA) as well as conservative planning on the expenditure side. Based on our previous student growth and historical savings, we anticipate further reducing the shortfall for 2024-2025.” Dr. Ferguson said.
Dr. Ferguson continued, “Even though the basic allotment has remained static since 2019 despite nearly 20% inflation, increasing demands, and the cost of educating and safeguarding our students, our local Board of Trustees realizes that without recruiting and keeping the outstanding, high-quality teachers and staff we have in Prosper ISD, we could not maintain the excellent educational opportunities our community demands. Therefore, we increased our salaries by 3.5% for all employees and increased our health care contributions.”
The Texas Legislature has not adjusted the per-student allotment since 2019 while implementing multiple mandates with little to no additional funding.
WHY ARE HUNDREDS OF DISTRICTS ADOPTING DEFICIT BUDGETS?
Texas schools face a funding crisis due to legislative inaction and inflation. The state failed to increase the basic per-student allotment in 2023, leaving schools underfunded by about $1,300 per student compared to 2018. Since 2019, inflation has risen over 22%, significantly impacting school budgets. Districts struggle with increased costs for fuel, insurance, maintenance, and food services. Additional financial pressure comes from unfunded mandates for school safety and accelerated instruction programs.
NOTES ON BUDGET
More than 81% of this budget is designated for employee salaries, once again emphasizing the significant regard attributed to the roles of educators and staff members.
On April 15, 2024, the Board unanimously approved the administration’s recommendation for a 3.5% pay increase for all current employees for the 2024-2025 school year.
On June 17, 2024, the Board unanimously approved to increase the district contribution toward monthly health insurance premiums to offset the 10% increase in TRS ActiveCare.
In addition to the salary increase, the Board of Trustees also approved recommendations for special education and dual language stipends, aiming to support further and reward our staff's specialized skills and extra responsibilities.
Prosper ISD commits over $3 million annually to the safety and security of our campus and district facilities. Each campus is assigned a TCOLE-certified peace officer (since 2018).
NOTE ON TAX RATE
In Texas, school districts are funded nearly exclusively by local property taxes and state allocations. Two crucial components of a school district's funding structure are the Maintenance and Operations (M&O) tax rate and the Interest and Sinking (I&S) tax rate. These rates serve distinct purposes in funding the operations and infrastructure needs of the school district. In summary, the M&O tax rate funds the day-to-day operations of a school district, while the I&S tax rate is directed toward repaying debt incurred for capital projects.
Maintenance and Operations (M&O) Tax Rate
The M&O tax rate is dedicated to funding the ongoing operational expenses of a school district. These expenses cover the day-to-day functioning of schools, including salaries and benefits for teachers and staff, utilities, supplies, maintenance of facilities, transportation, and other essential operational costs. The M&O tax rate is subject to the state's funding formula for public education, which aims to ensure a baseline level of funding for school districts across the state.
Since schools are primarily people-oriented establishments, a significant portion of the M&O funds—typically around 80%—is allocated to covering personnel-related costs. This includes paying teachers, administrative staff, support staff, and other employees involved in the daily operations of schools.
Interest and Sinking (I&S) Tax Rate
The I&S tax rate is specifically designated to fund the repayment of debt incurred by the school district for capital projects. These projects typically include constructing new school buildings, renovating or expanding existing facilities, and significant infrastructure upgrades. When a school district needs to undertake such projects, it may issue bonds to borrow money. The funds raised from these bonds are used to finance capital projects, and the I&S tax rate is established to generate the revenue needed to repay the borrowed funds, including the principal amount and interest.
In 2023, voters overwhelmingly approved $2.7 billion for new schools to address continuing growth, modernizations to older campuses, technology, and a new performing arts center.
