Trustees look to quantify cost, value of non-resident students



Quantifying the costs of educating a student compared to the revenue the student generates for the school district may be a difficult concept to grasp, but Liberty Hill ISD officials are working to create a better public understanding of a complicated system — especially as it relates to transfer students.

Liberty Hill ISD has always maintained an open enrollment policy — accepting students from outside the school district without charging tuition. Students must apply for admission or readmission every year, and acceptance is dependant largely upon previous school history.

To date, administrators say the arrangement has worked in Liberty Hill’s favor financially, in that increased enrollment means more state and federal aid. Plus, it doesn’t hurt that those selected for admission are typically top performing students.

But school trustees are looking for hard numbers as overall enrollment is climbing, teachers are being added, and talks are beginning of the need for a new elementary school.

Elected officials asked district administrators this month to produce a comparison of costs versus revenue for transfer students. During a discussion at a regular school board meeting Sept. 18, Trustee Clint Stephenson said the information is important as the district is projecting the need for an additional elementary school in 2019.

“I’m just trying to figure out how much it is,” he said, “because we’re about to go to everybody and ask them for more money on a bond and we need to be able to justify that to them on why open enrollment is a good deal for the district. I’m still trying to wrap my head around it.”

Stephenson was elected to the school board in May, and was seated during the same meeting that trustees unanimously voted to approve the open enrollment policy for the current academic year. Although he voted for the policy, he raised questions then about the costs of accepting transfers.

Last week’s discussion came on the heels of a request by one family residing in Burnet CISD in Rio Ancho to allow current transfer students to pay tuition or be grand-fathered should the district decide to end the policy.

Superintendent Rob Hart produced numbers prepared by Texas Education Agency showing the impact on equalized wealth with tuition charged versus no tuition charged for non-resident students. Those numbers are important because under the state’s current school finance system, wealthier school districts share their local tax revenue with property-poor school districts under what’s known as the “Robin Hood” plan.

Liberty Hill ISD is currently considered a “gap district” in that its property value per weighted average daily attendance (WADA) is in the range of Chapter 41 but below $514,000 — the amount that triggers recapture funding. For the current academic year, the estimated Chapter 41 wealth per WADA in LHISD is $362,614.

Hart provided trustees with a projection for 2018-2019, which he stressed is simply a projection administrators made based on the previous two years, that shows the district inching closer to the recapture status if it were to charge tuition for transfer students in 2018-2019, or not accept them. That projected number was $432,043 compared to $393,129 if no tuition is charged. He cautioned that the projection is based on current average daily attendance and this year’s property values, which will change for 2018.

Hart said the district’s Chapter 41 status is at the center of the financial discussion on whether or not to accept transfer students.

“Charging tuition doesn’t benefit us,” Hart said. “If we charge tuition, they (transfer students) don’t count.”

Hart was referring to the role non-resident students play in a complicated formula to offset the high property value, which is used to determine recapture status.

“To me that argument doesn’t hold that much weight because we’re still so far under (the recapture amount of $514,000),” said Stephenson. “I’m not for or against it. I just need to be able to go out and sell a bond to people on why we’re building schools for people who aren’t in the district. I think we owe them an answer that makes sense.”

Hart and LHISD Chief Financial Officer Jennifer Hanna met with The Independent this week to further explain the financial impact of open enrollment.

“The benefit of accepting transfer students is reducing the wealth per student on Chapter 41 calculations,” said Hanna. “If we use historical trends, we’re facing recapture in three to four years. Transfer students can help us postpone that.”

“It’s going to happen eventually,” added Hart, noting demographic projections of an average 9.6 percent enrollment growth through 2021 and double digit increases in property values.

Transfers by the numbers

This school year, there are 393 out-of-district students attending Liberty Hill schools. Of that total, 105 are the children of LHISD employees.

Hart said transfer students represent about 9 percent of the student population, and 27 percent of the transfer students are employees’ children.

For the first time, the district set a June deadline this year for applications for admission and assigned accepted students to the schools where numbers were needed to fill in gaps and maintain balance in classrooms. Because of the deadline, the district accepted fewer students this year than the two previous years — 68 fewer than the past school year.

Records provided by the school district show transfers by grade level. This year, the highest number of transfer students are in the 11th grade (46) and the fewest are in second grade (21).

Totals for other grades are kindergarten, 22; first grade, 26; third grade, 32; fourth grade, 30; fifth grade, 28; sixth grade, 30; seventh grade, 25; eighth grade, 35, ninth grade, 38; 10th grade 33; and 12th grade, 27.

Revenue vs. expenses
Total combined revenue per student generated from state, local and federal sources is $10,839. Of that, about $2,701 comes from the state, officials say.

Multiplying the amount of state aid per student ($2,701) by the current number of transfer students (393) is $1.061 million that LHISD can expect to receive from the state. Without transfer students, the district would not receive those funds or funds from the federal government.

When asked to estimate costs for educating a student, administrators say the total operating cost is $8,320, which includes $4,551 in instructional costs.

Hanna said that fixed and variable costs must be considered when examining the cost versus benefits of accepting transfers.

Fixed costs would include anything that is related to delivery of curriculum and instruction, administration, utilities, custodial and facilities maintenance.

Variable costs are those that could be avoided if transfer students were not allowed. This might include supplies, and to some extent, the cost of teaching staff.

“Once the budget is set, the only variable costs are the supplies needed for each student — we give an allocation per student — and then if any additional staff are required to be hired,” Hanna said.

Because transfer students are used to fill classes that are already there, administrators say the district would have most of the costs even if non-resident students were not here.

Hart said the record-setting enrollment growth this school year, which came after the first day of school, created the need to add 11 new teaching positions this month. He stressed that was local growth, not transfer students.

“All of that student growth is home grown. It’s ours,” Hart said.

Hanna said it isn’t uncommon for there to be controversy surrounding discussions about accepting transfer students.

“There is an economic benefit, but there’s also a cost. It’s difficult for local taxpayers to see the benefit, but they (transfers) help to spread our fixed costs,” Hanna said.

“We live this funding formula,” Hart said. “If you’re not in it, it’s very difficult to understand. We try to explain all this with real numbers, but it’s difficult to relate to a household or even a business’ budget.”

Hart said it’s difficult to predict what the real impact would be on the school district if a decision was made by trustees to change open enrollment. He said decisions would have to be made as to whether the district would be closed completely, whether some students would be grand-fathered, whether only high school students could remain, or whether the doors would only stay open to employees’ children.

“I suspect a lot of people would move to the district if we told them we were no longer accepting transfers,” said Board President Clay Cole.

“I bet the developers would like us to close it,” added Trustee Jeff Madison.

If the hard line approach is taken restricting all out-of-district students, then LHISD would today be only $102,571 away from the recapture trigger, and in about three years would have to start making payments to the state.

“We’re about to go to people in the district and ask them to open their wallets and ask them to pay for more schools,” said Stephenson. “The number one thing they will say is why should I pay to educate somebody else’s kids?”

“Even if we close it, is that going to change whether we need more space for children?” Cole asked.

“No, it won’t,” Stephenson responded. “But at least everybody here is paying for everybody here. We’re paying for people who don’t live in the district. Students of staff is a different animal, that is a recruiting tool, and it has a very valid argument and legs to stand on.”