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Vote on ‘sharing the wealth’: School tax rate, Chapter 41 at issue in Nov. election

The Port Arthur Independent School District will be holding a joint election with Jefferson County for a special election regarding Chapter 41 Wealth Equalization in November.

“It’s in preparation for the tax rate in the 2019-2020 school year… it will go into effect in September of 2019,” Phyllis Geans, assistant superintendent for business and finance, said.

Chapter 41 is a part of the Texas Education Code that requires certain “property wealthy” school districts to share their tax revenues with other, less wealthy districts.

The provision is sometimes called the “share the wealth” or “Robin Hood” plan due to the apparent (and mandatory) donation from wealthy to non-wealthy districts.

Port Arthur is considered a property wealthy district.

“We’ve been considered a Chapter 41 donor for at least 12 years,” Geans said.

“We’re not rich; we’re just surrounded by refineries,” Port Arthur Superintendent Mark Porterie said.

The refineries that surround Port Arthur generate significant tax revenues, but that does not mean the school district receives all of those revenues.

When Chapter 41 districts have their funds collected by the state, those funds are essentially “recaptured” by the school finance system to help fund public education for other districts.

Chapter 41 districts could elect to pay this recapture in a few ways, including student attendance credits and portions of property within its borders.

“Student attendance credits are deducted from the funds the district would otherwise receive,” Geans said. “We give it to TEA (Texas Education Agency) and TEA decides where it needs to go.”

The Port Arthur district’s relative wealth, as determined for all other Texas school districts, is determined by the taxable value of property within its borders divided by the number of students in weighted average daily attendance.

After Harvey, the district lost many students and families due to displacement. Accordingly, attendance dropped for Port Arthur schools, potentially leaving it with less “wealth” than it had the year before.

“Right now, TEA is sending a note indicating whatever the student drop was,” Geans said. “They would look at the average student count over a certain period so we would not be adversely affected.”

Geans said TEA’s initial records showed the district at a loss of about 400 students, which translated to a drop of roughly $4 million.

However, TEA will help the district not to suffer that full loss, but Geans did not know how TEA would make that amount up to the district.

To further complicate matters, the district’s 10-year agreement with Motiva and TEPPCO, which operates petroleum pipelines, is set to expire this year, opening up the district to pay on recapture what it had not had to pay before.

The Texas comptroller allows industries to build or install property and create jobs in exchange for a 10-year limitation on the taxable property value. When these agreements expire, the refineries will pay more taxes — and the state will take more from the district as a result.

“They haven’t had time to calculate the refinery impact yet, the amount that would be paid,” Geans said.

“The process has to take place first; the district has to adopt its tax rate at the August board meeting. Once that is adopted, it will be provided to the Jefferson County tax department. They’ll then take those values and take that rate from the district.”

Nevertheless, Geans was optimistic about the district’s financial future.

“I think we’ll probably be OK, based on what we’re rocking.”

Geans said the district wants to ensure its citizens understand what’s going on with Chapter 41 proceedings.

“The same thing happened in Houston where the (Houston) district didn’t use student credits to repay its recapture,” she said. “As a result, TEA took property assessed for the district and gave it to another school district.

“(So) Houston went back and changed their minds. They wanted to pay with student credits.”

Geans said PAISD does not want to make that mistake when repaying recapture, hence it will pay in student attendance credits.