Kilgore ISD is preparing to deal with financial changes coming from state-level.

At Monday’s board meeting, Superintendent Dr. Andy Baker brought up some potentially good news for the district: the state may refund interest payments made by KISD related to tax law changes on heavy oilfield equipment.

“Bottom line is, within House Bill 3, there is language that was signed into law that says the state, being (Texas Education Agency), is going to refund the interest,” Baker said.

House Bill 3, passed in May by the Texas legislature, contains significant funding changes for Texas schools. The bill includes measures to boost school funding while cutting property taxes in school districts.

KISD learned they would have to repay more than $600,000 in taxes collected from companies operating in their tax district following a Texas Supreme Court decision decided in 2018. The case, which began in 2011, saw school districts across Texas arguing against natural gas and oil companies who felt some of their heavy equipment was being improperly taxed. The state sided with the oil and gas companies and districts were ordered to repay the excess taxes they collected, plus interest.

“While we’re not going to see complete refunds for all that money that we’ll possibly have to give back to these corporations and these businesses, the good thing about it is we did find language in there that says they’re going to at least look to repay the interest,” Baker said.

At this time, the district is waiting to learn what the actual impact of the interest refund might be. Ttrustees and KISD employees are poised to hold budget workshops in the near future to account for the new developments.

“We don’t know how much that’s going to be. We don’t know when that might happen but the language is in House Bill 3 and House Bill 3 did get signed into law,” Baker said.

“We are expecting more information on that here in the next couple of months.”

Baker also discussed a major component of House Bill 3, a measure which includes $6.5 billion slated for public education. Much of that money is aimed at boosting pay for Texas teachers and school employees.

The problem is, Baker said, districts don’t yet know how much they’re going to get and therefore are somewhat uncertain about how to handle state-mandated budget requirements.

“House Bill 3, as it’s been signed into law, has absolutely zero language talking about anything going specifically to any person or position who is specifically going to get a pay increase. It does not say classroom teachers, it does not say nurses, it does not say librarians. It says nothing of that,” Baker said.

He explained each district in Texas receives a sum from the state called a Basic Student Allotment. By state law, 30 percent of the allotment must go towards personnel compensation but every district gets a different amount of money.

“Kilgore doesn’t know what they’re going to get yet but we do know 30 percent of whatever we get must go towards personnel compensation.”

The complication arises when considering two caveats mandated by the state in HB 3: no amount of the allotment can go towards pay increases for administrators and the district will be penalized by the state if they underestimate the amount of the 30 percent allotment.

“75 percent of this 30 percent must be used to compensate classroom teachers, full-time librarians, full-time school counselors and full-time registered nurses, with priority-differentiated compensation for classroom teachers with more than 5 years experience. This part is brand new to Texas law,” Baker said.

He added the remaining 25 percent of the allotment may be used to increase compensation for other full-time employees who are not administrators – bus drivers, paraprofessional and clerical workers, cafeteria workers and others.

Trustees said the district would have to carefully review its employment and compensation policies, as well as the type of work its employees do, to ensure the new allotment is distributed properly.

“If you can justify that a part-time position is technically full-time then they get (a compensation increase) too,” said trustee Dereck Borders.

“And that’s what we have to do,” Baker said.

“Part of our compensation plan, we have to come up with definitions for what our positions are. We have to be able to define what an administrator is. We’re going to have to do this with Kilgore, sit down and define what an administrator is. Then we have to come up with a compensation plan based on what our local definition of how we want to award that new money.”

Texas Education Agency mandates a minimum pay schedule for Texas educators based on years of experience.

Baker said KISD’s local salary schedule is above the state average for the first few steps on the schedule but falls under the state average, in some cases by as much as $4,000, for the higher steps, which are for teachers with more than a decade of experience.

“The initial estimate for additional compensation for next year, at a minimum, is $1.1 million that we’ve got to come up with. There’s a lot of conversations that we’re going to have in the next few weeks at those budget workshops and try to figure out how that new money is going to be used,” Baker said.

Borders added a specific concern – even though KISD’s basic allotment is going up, it may not go up by enough to get the local pay schedule above state averages in all cases.

Trustee Alan Clark said the district may get the budget wrong at first and would need to fine-tune it as more information becomes available.

Baker said Texas Education Agency, Texas Association of School Administrators and Texas Association of School Boards were encouraging districts to “think outside the box” and consider other ways of increasing employee compensation, rather than only relying on pay increases.

This could include recruitment incentives to attract qualified teachers, retainment incentives to encourage employees to stay with the district and increasing insurance benefits.

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