The Highland Independent School District learned earlier this month that it is a property wealthy district after being notified of its status by the Texas Education Agency.

In TEA terms, Highland is a Chapter 41 district for the 2008-09 school year.

Chapter 41 of the Texas Education Code makes provisions for certain school districts to share their local tax revenue with other school districts. For the purposes of the school finance system in Texas, districts are designated as either property wealthy or property poor.

The relative wealth of the school district is measured in terms of the taxable value of property that lies within the school district borders divided by the number of students in Weighted Average Daily Attendance (WADA). Chapter 41's provisions are sometimes re-ferred to as the "share the wealth" or "Robin Hood" plan because districts that are deemed to be property wealthy are required to share their wealth with property-poor school districts.

Highland superintendent Guy Nelson said the funds that are distributed by the property-wealthy districts are "recaptured" by the school finance system to assist with the financing of public education in school districts that are property poor, according to information from the TEA's manual for districts that are subject to wealth equalization.

The Highland ISD has been declared a Chapter 41 district because of significant increases in property values due to the new wind farms in the district. Nelson said those wind farm values will peak in the 2008-09 school year and then decline due to tax code Chapter 313 property tax limitation agreements between Highland and the wind energy companies. By the 2010-11 school year, Nelson Highland ISD will possibly fall below the wealth/WADA value for Chapter 41.

The graphs pictured above show the changes (actual and projected) in the Highland ISD property values and the taxable values for the wind farms.
Nelson said it is important to note that the fluctuation in property values applies to maintenance and operation (M&O) taxable values only. M&O taxes, he said, are those used for the everyday operation of the school district. Nelson said the wind farms remain at full taxable value for debt service purposes.

Nelson said one of the misconceptions about Chapter 41 status is that the school district suddenly has more money available because of the increased property values. He said that unfortunately, with the current Texas school fi-nance system, maintenance and operations revenue for school districts is essentially capped at either 2005-06 or 2006-07 levels, depending on the district, and that any increase in local revenue is offset by a corresponding decrease in state funding.

Depending on final taxable values, Highland could generate approximately twice as much local revenue in 2008-09 as in 2007-08. However, the net increase in funding for the school district will be less than 10 percent. Nelson said the rest of the local revenue will either be sent to the state or shared with one or more "property poor" districts due to TEA's Chapter 41 regulations.

Nelson said because of the increased property values, the maintenance and operations tax rate for 2008-09 will decrease from the current rate of $1.16 per $100 valuation. However, when property values decrease in 2009-10 and 2010-11, M&O tax rates will increase to maintain local revenue.