Tax and tuition hikes proposed for district 10-year forecast

Increases in tuition and taxes will be required over the next 10 years to counter a 10 percent loss per biennium in state appropriations, Diane Snyder, vice chancellor for finance and administration, told trustees Wednesday at a board budget retreat in the Heritage Room at St. Philip’s College.

She said a six-tenths of a cent increase in taxes for fiscal year 2013 is required to establish recurring revenues to counter state funding declines.

She said 22 percent of the district’s revenue is received from the state and will drop to about 12 percent over the next 10 years.

Thirty-three percent of the district’s revenue is received from taxes and will increase to 34 percent with the proposed increase.

The six-tenths of a cent increase would be a tax rate of $0.103371 per $100 valuation, which is higher than the current tax rate of $0.096873.

The $0.103371 tax rate represents an increase that is 50 percent of the difference between the current effective tax rate of $0.099396 and the estimated rollback rate of $0.107347. The rollback rate is the rate at which taxpayers can petition for an election to lower property taxes.

The increase would mean an annual increase of $9.36 on a home valued at $144,000, the average value of homes in Bexar County, she said.

The tax increase would produce $6 million to invest in facilities’ preventive maintenance needs and student success initiatives, Snyder said.

She said the tax rate is designed to pay for maintenance, facilities, facilities’ employees and their benefits, which the state is not allowed to fund.

“It’s making up for instruction which the state has failed us,” Snyder said.

Snyder said if the district does not increase the tax rate, it would cost $73.2 million from a fund balance during the 10 years. She said currently the available fund balance is $17 million.

On top of a proposed tax increase, in May, the Alamo Colleges board of trustees approved a 3 percent tuition increase for fiscal year 2013.

For in-district students enrolled in six or fewer hours, that means an increase of $14.

Snyder said a 5 percent tuition increase has been projected for fiscal year 2014 to fiscal year 2017, followed by a 3 percent tuition increase for fiscal year 2018 to fiscal year 2022.

A special tuition increase of $80 per hour is also being projected for students who have completed more than 75 hours, but have not graduated, she said.

The proposal is being considered to begin in fall 2013 and would generate an estimated $920,000 annually from fiscal year 2014 to fiscal year 2017, Snyder said.

She said if the state decline in funding slows throughout the next 10 years, it would eliminate the need for future tuition rate increases.

“It seems like looming doom, but I got happy doing this exercise in that we get it to balance and still achieve many of our objectives,” she said.

District 2 trustee Denver McClendon said he prefers a greater tax increase than what is initially proposed rather than tuition increases.

He suggested a tax rate increase that is 75 percent of the difference between the effective rate and the rollback rate.

That increase in property taxes would generate an additional $1.8 million to the $6 million expected from the increase 50 percent of the difference between the effective tax rate and the rollback rate.

“In lieu of tuition increases, look at taxes because we have been very kind to our taxpayers over the years and have not been extravagant in looking at tax increases,” he said.

District 5 trustee Roberto Zárate said he is not opposed to the tax increase that “has been imposed on us by the state structure.”

“I think we have established a good track record that shows good will toward the taxpayers, and I think a modest increase is not something that I would be opposed to anymore,” he said.

District 7 trustee Yvonne Katz said she favors McClendon’s suggestion; however, the district also needs to communicate the action to the legislature because “they’ve sloughed it (funding public education) on the backs of all the taxpayers.”

“I would really love to see that 75 percent calculation. As I used to say, that’s two show tickets a year or a really good six-pack or 12-pack of beer,” she said.

District 1 trustee Joe Alderete said the conservative approach that the district is taking needs to be explained to the public.

“It’s not just a tax rate increase, but there were several things that we did in order to make ourselves lean and mean in order to justify the tax rate increase,” he said.

District 9 trustee James Rindfuss asked Snyder if she found a point where the district brings in less revenue because tuition has increased too much, therefore decreasing enrollment and putting a burden on the taxpayer by raising taxes.

Chancellor Bruce Leslie said it’s a challenge to determine, and he’s not sure if the district is in a position to identify a “point of no return.”

“The tuition increases haven’t really turned away that many students,” he said.

Rindfuss asked Leslie for his recommendation.

“Well, this (the initial proposal) is my recommendation,” Leslie said.

Rindfuss then asked Leslie to explain why he thinks the tax rate 50 percent of the difference in the effective and rollback tax effective and rollback tax rates is better than the rate that is 75 percent of the difference.