Brittany Kelley
KYLE — The Hays CISD Board of Trustees discussed a $0.12 tax rate increase and tax anticipation note at its Aug. 18 meeting, following lack of funding from the Texas Legislature.
Deborah Ottmers, chief financial officer, gave the trustees a presentation regarding the tax rate for the 2025-26 fiscal year.
She began by providing an overview of the school district, which includes 25,400 enrolled students in 28 campuses and 3,600 employees across 221 square miles.
According to Ottmers, based on the anticipated increase in property value — 2% market value and 3% taxable value — and the probable homestead exemption increase from $100,000 to $140,000, the district expected the tax rate to stay the same in June, which is when the budget was adopted.
“We remit what we think [the compressed tax rate] is to the [Texas Education Agency] and they do their calculations and they agree or they don’t. But the tax rate came out to be the same as last year for the maximum compressed tax rate and the total,” explained Ottmers.
Currently, she explained, $0.6169 is the compressed tax rate, with an enriched tax rate of $0.05, bringing the total to $0.6669. Then, the debt service rate is at $0.4877, which, when combined with the tax rate, is $1.1546 — the same as the 2024-25 tax rate. According to the Texas Comptroller, an enriched tax rate “is defined as any tax rate effort in excess of the district’s [maximum compressed rate].”
“We have been using our fund balance over the last several years in hopes that we would have received an increase from the state and so, I know these numbers are small, but we started looking at the cash flow because I was concerned when I looked at the fund balance [and] wondering, ‘Is there enough money to pay the bills.’ So, we started taking a good look at that,” said Ottmers
After analyzing and determining the amount of cash flow at the end of each month for the fiscal year, Ottmers came to the realization that the district would not have enough money to pay its teachers, which amounts to approximately $18-$20 million each month.
“In the finance area, we’re sweating a little bit to make sure that we have enough money to pay payroll, which is before the end of the month, so we took a look at that … At payroll time, what you will notice is, there’s several months, [which includes August, September, October, November and December,] under $0 because the cash flow isn’t there,” said Ottmers.
In order to become financially stable within the district, she is proposing the following:
• A tax anticipation note approval, which would be a maximum of $31.5 million for a short-term loan. The district would then pay back the loan in February 2026 after receiving property taxes. According to the Texas Government Code, tax and revenue anticipation notes are provided by the Texas Comptroller “in anticipation of a temporary cash shortfall in the general revenue fund during any fiscal year.”
• A $0.12 increase to the maintenance and operation (M&O) tax rate, which would generate approximately $26,000 in annual revenue to “help us restore the fund balance,” and increase the $1.1546 tax rate to $1.2746.
“Compared to the last tax statement for this year, because we feel certain that the $40,000 increase in the homestead exemption will pass, the majority of the people, including the average home-priced homeowner, will save money,” said Superintendent Dr. Eric Wright.
Ottmers noted that this tax increase is important because, without it, the district wouldn’t have enough money to fund its teachers; therefore, leading to decreasing staff numbers and increasing class sizes. Additionally, in an information sheet released by Hays CISD, it is noted that if the tax rate does not pass, special programming and educational services may be cut, as well as an increase in or new fees would be considered.
Expressing frustration with the legislature, as the lack of funding is what is pushing the board to consider the increase, was trustee Byron Severance. He stated that while the world increased its prices during COVID-19, the district chose to compress its tax rate, hoping that the state legislature would fund them. Now, five years have passed without support and it is time for the district to start controlling the narrative, said Severance.
“We’re finally at a point, where we’ve got to let our taxpayers take control of this and put us back in financial [stability], where we need to be and get our fund balance bill back up and that’s what tonight’s all about,” Severance said.
He then motioned to adopt a resolution to set the property tax rate for the fiscal year 2025-26 at $1.2746. The motion passed unanimously.
Despite the board approving this item, it will have to be approved by the voters during the Nov. 4 election. For more information, visit www.hayscisd.net/page/election2025nov.
Next, the tax anticipation note was discussed and voted on.
Of the $31.5 million that would be requested in the tax anticipation note, Ottmers stated that $20 million would be needed to make August payroll and that, if approved, the money would be in the district’s bank account by the end of the week.
Wright also clarified that although the board “needs” to approve the note to pay staff in August and September, there will be bids coming in from a sale of surplus property, which will offset some of the concerns in the coming months. Afterwards, staff will have a better idea of where the district sits in terms of its funding.
According to the financial staff, the note is available to pay in full Feb. 15, 2026. Once the money is in the bank, it will begin to earn interest, which will offset the interest from the loan — approximately $575,000.
“This is not because we weren’t trying to make the best decisions for this district. We have done everything we can. We have tightened our belt; we have not hired people when they have left. We’ve had people have to do more and more with less and less. That’s what we’ve done around here to try to not cut programs and not cut employees,” said trustee Vanessa Petrea. “I’m grateful that we have innovative, problem-solving folks trying to help us bridge the gap and make sure that we pay our employees because they are the backbone of this district.”
The trustees voted 7-0 to adopt a resolution authorizing the issuance of a tax anticipation note.
To listen to the discussion, visit bit.ly/4lAIUW8.
