MILLSAP — Before adopting a proposed $8.5 million budget and tax rate of $1.665, Millsap ISD trustees heard Business Manager Lori Hobbs explain the goals of the budget.

Hobbs’ presentation was part of a public hearing during which no one else spoke.

That aside, Hobbs addressed the 2012-13 school year budget, which begins in September and is “built on anticipated needs … and is functional and flexible.”

In addition he said the needs will be adjusted as the year progresses.

The budget includes a $6.738 million maintenance and operations fund, $406,710 food service fund and $1.439 million debt service fund.

The $1.665 per $100 taxable property value tax rate remains what it has been for the past two years, since the November 2010 tax ratification election. This includes an M&O rate of $1.17 per $100 taxable value and a debt service rate of 49.5 cents.

During the Aug. 27 public hearing, Hobbs offered an overview of key changes in the budget. It includes salary increases for all staff and support personnel to continue the recruitment and retention of qualified employees.

In general, staff have gone two years with no overall increase, she said, calling the 1.5 percent raise — equating to roughly $600 per teacher — “a great motivator.” In addition, Hobbs said the budget reflects:

• A reduction in utility costs, partly through turning switches off and monitoring use, but also partly because of a reduced kilowatt-hour rate at all campuses, excluding the elementary, which is on a different plan.

• Addition of two staff — a state-funded at-risk counselor and a part-time athletic director.

• Conservative funding for financial stability.

Hobbs said that over $6 million of Millsap ISD’s market-value property remains in protest. Once that clears the respective appraisal districts, some more tax revenue should trickle in.

While Hobbs said increases in property value and tax-collection rates do not significantly raise a district’s revenue, Superintendent David Belding pointed out that Millsap’s 2010 tax ratification election, which added 13 cents, does bring in additional revenue that is not reduced by state funding.

“By supporting the TRE, our community has really helped the school district financially,” Belding said.

There are primarily two ways a district can bring in more revenue, beyond the TRE — by either enrolling more students or increasing daily attendance, according to Hobbs.

Last year’s budgeted target attendance rate, called the refined average daily attendance, was greater than MISD’s actual RADA. In 2011-12, the district budgeted for 720 students, since the previous year’s actual RADA was 719, but ended the year with an actual RADA of 698. Therefore, she said the 2012-13 budget will reflect a more conservative projection, using a RADA of 700.

Hobbs said the district has planned on a balanced 2012-13 general fund budget, with $3.378 million coming from the state and $3.36 million from local sources.

This includes over $5 million, or 74 percent, of the district’s $6.73 million maintenance and operations fund that goes toward payroll, while the remaining $1.7 million goes to all other general operating expenses.

In other funds, Hobbs told trustees that MISD expects a balanced food services budget, but the district plans for a $83,961 deficit in its debt service fund, which will be covered by the bond fund balance. Belding said the bond deficit is not as high as originally projected because property values, contributing to the I&S rate, rose some. He added that it’s not out of the ordinary for there to be a deficit during one or two years of an entire bond program.

In summarizing the public hearing of Millsap ISD’s budget, Hobbs offered trustees some assurances for the 2012-13 budget. These include spending money wisely, providing resources for students and improving student services, monitoring funds for efficient operations and maintaing an appropriate fund balance.

“We will not be frivolous with anything we do – we will not go without, but we won’t be extravagant,” Hobbs concluded the hearing.

In other business, MISD trustees:

• Heard from Belding that the district was up 49 students on the first day back. Starting attendance was 782.