For the first time in its history, the Smithville school district has been classified as a property-rich district and stands to lose more than $40,000 in school funding for the 2017-18 school year, officials said, despite more than 60 percent of its students being eligible for free and reduced lunches

Chapter 41 of the Texas Education Code outlines provisions for school districts with higher taxable value of property per its number of students in weighted average daily attendance to share its wealth to help finance public education across the state.

Under the code, the district will have to give up $40,667 to the state’s Wealth Equalization program, commonly referred to as the "Robin Hood" plan.

"Smithville ISD’s total property value has increased faster than the district’s enrollment," Superintendent Rock McNulty said. "There is little chance that the (Texas Education Agency) Chapter 41 designation will be removed by TEA unless enrollment increases by approximately 110 students."

Any increase in the student attendance will lessen then recapture amount required by the state from the Smithville school district. The district typically has an average attendance rate of about 95 percent.

Wealth per student under the program is determined by the taxable value of property. With the state valuing property in the district around $769 million, TEA found that property within the school district is too valuable per the number of students and exceeds the $319,500 per weighted average daily attendance allowed.

For the 2017-18 school year, TEA uses the 2016 state certified property values to determine if a district is property rich.

The preliminary 2016 property value for the Smithville school district is $769 million, an increase of $155 million from the 2015 final state certified value of $614 million, according to school district Finance Director Jean Ann McCarthy.

Bastrop County, on average, had home values rise by about 16 percent this year. The Bastrop Appraisal District said the increase was necessary to keep up with the market and to meet the property valuations the state comptroller’s office finds.

According to a letter from TEA to the district, the agency is using current preliminary property values set by the state as well as enrollment estimates based on prior years.

TEA said it will review the data as soon as the final certified state property values are determined and notify the school district of any changes.

If the district ends up paying the Chapter 41 recapture funds, the amount will be deducted from their current state funding payments, McCarthy said.

TEA also notified the district of its five options to reduce its wealth per student: The district could consolidate with another district, detach property, purchase attendance credits from the state, contract to educate nonresident students or consolidate its tax base with another district.

At the recommendation by McCarthy, the school board chose to allow the superintendent to purchase attendance credits. McNulty will file the paperwork by the Sept. 1 to meet the deadline to be eligible for an early agreement credit.

"Any loss in revenue is difficult because we try to keep a very tight budget with striking a balance of school district needs while having consideration for our tax payers," McNulty said.

At the end of the school year, TEA recalculates the district’s student weighted average daily attendance in a "settle up" to determine if a school has to pay any recapture funds back to the program.