ACC Tax? Yes or No

ACC Tax!  WHAT ?!! More tax ?!

That’s my first reaction when I heard about ACC annexation.  For those of you who don’t live around Austin, TX area, ACC is a local community college in Austin, TX.

ACC serves 19 different school districts around Austin, TX.  Unfortunately, only 8 school districts get the privilege to pay “in-district” tuition.  According to ACC’s website, part of Pflugerville (read: flu-ger-ville) is already part of ACC district and qualify for “in-district” tuition.  However, the majority part of Pflugerville is not part of ACC district.

WHAT !!!  (yup… I like to say “what”)

That’s crazy!  Pflugerville and Austin are next to each other.  Pflugerville residents must pay out-of-district tuition to attend ACC; even though I can reach 2 different campuses within 20 minutes from Pflugerville, TX.

How does ACC get funding?

After further investigation, I found out ACC (Austin Community College) receive their funding from property taxes and student tuitions.  Unlike other four year colleges or universities, a community college does not receive state funding assistance.

Alright, I start to feel sorry for ACC for not receiving any state funding.  It’s like the only child in the family who don’t get a present at Christmas. Right?!

The cost of ACC tax

But, I still don’t like the idea that it cost me money.  How much is it exactly?

Based on my current residential tax breakdown (it varies depending on where you live), I’m currently paying taxes on 6 different categories with a total tax rate of 2.656285 per $100 value.

ACC annexation adds $0.1008 per $100.

According to Zillow, the median home value in Pflugerville is $244,000.  So, I will use this number to show how much ACC tax is going to impact your overall residential tax.

DescriptionTax Rate per $100 Tax for a $244,000 value house
Travis County0.369000$900.36
Pflugerville ISD1.540000$3,757.60
Travis Central Health0.107385$262.02
City of Pflugerville0.539900$1,317.36
Travis County ESD #20.100000$244.00
Travis County MUD #150.407500$994.30
Total before ACC3.063785 $7,475.64
ACC0.100800$245.95
Total w/ ACC3.164585 $7,721.59

In the end, a $244,000 house will pay an additional $245.95 per year or $20.5 per month.

I believe most of us have spent at least $20 for something to treat ourselves in a month, or buying some that we don’t even need or use.

ACC student saves $16,680 in 2 years

The obvious benefit for being part of ACC district is to pay the in-district tuition of $85/credit instead of $363/hour.  That is a $278 saving per credit hour.

ACC In-District tuition Vs ACC Out-of-District tuition

If I’m not mistaken, I took approximately 60 credit hours (2 years) in a community college in San Diego, CA before I transferred to UT-Austin.  That is a $16,680 savings for taking 60 credit hours in ACC per student.

The Unfavorable Scenarios

Let’s create a hypothetical scenario with some unfavorable situations.

I want to see if $16,680 is really a worthy scenario for someone who might attend ACC 20 years later.

A newlywed couple with one child

A newlywed couple, the Joneses, purchased a house for $244,000 in Pflugerville, TX.  Let’s assume the house appreciates at 4% per year. Please note with 4% appreciation per year; it will double the value of your property in 19 years, and increase your property tax tremendously.

Since we are creating unfavorable situations, let’s assume ACC tax has been approved.  Therefore, the Joneses have to pay ACC fees of 0.1008 per $100 of house value.

The Joneses don’t have any child at this moment.  They will send their only child to ACC in 20 years, but unfortunately, they are paying the ACC tax starting from the day they purchased their house.

After twenty years of paying ACC Tax

Based on the table below (ACC tax breakdown), after 19 years, this couple has paid a total of $6,805.79 to ACC.

On the 20th year, their child finishes high school and attends ACC for the first time in the Fall semester.  By this time, in our unfavorable situations, their house worth $514,071.20.  Their regular tax at 3.06 per $100 of property value is $15,730 per year, and an addition $518.18 toward ACC tax.

If the child takes 15 credits at ACC, then the family is saving $4,170 ($278 savings x 15 credit = $4,170) from paying in-district tuition instead of the out-of-district tuition.  However, the Joneses still lost $3,153.98 from paying taxes for the last 20 years.

The following year,  their son completed 30 additional credit hours at ACC (see year 21 in the table below).  Now, the Joneses saves $4,647.11 from the overall tuition saving vs tax.

The chart and table below details the money that the Joneses spent for paying taxes and saving from the in-district tuition.

Chart of benefit after paying ACC tax for 20 years VS. 2 years of education for 1 student
You can see the savings even after paying ACC tax for 20 years

ACC tax breakdown over 25 years

YearHome value with 4% increase / yearACC TaxCummulative ACC TaxSaving from In-District tuitionTotal
1 $244,000.00 $245.95 $(245.95) $- $(245.95)
2 $253,760.00 $255.79 $(501.74) $- $(501.74)
3 $263,910.40 $266.02 $(767.76) $- $(767.76)
4 $274,466.82 $276.66 $(1,044.43) $- $(1,044.43)
5 $285,445.49 $287.73 $(1,332.16) $- $(1,332.16)
6 $296,863.31 $299.24 $(1,631.39) $- $(1,631.39)
7 $308,737.84 $311.21 $(1,942.60) $- $(1,942.60)
8 $321,087.35 $323.66 $(2,266.26) $- $(2,266.26)
9 $333,930.85 $336.60 $(2,602.86) $- $(2,602.86)
10 $347,288.08 $350.07 $(2,952.93) $- $(2,952.93)
11 $361,179.61 $364.07 $(3,317.00) $- $(3,317.00)
12 $375,626.79 $378.63 $(3,695.63) $- $(3,695.63)
13 $390,651.86 $393.78 $(4,089.40) $- $(4,089.40)
14 $406,277.94 $409.53 $(4,498.93) $- $(4,498.93)
15 $422,529.05 $425.91 $(4,924.84) $- $(4,924.84)
16 $439,430.22 $442.95 $(5,367.79) $- $(5,367.79)
17 $457,007.42 $460.66 $(5,828.45) $- $(5,828.45)
18 $475,287.72 $479.09 $(6,307.54) $- $(6,307.54)
19 $494,299.23 $498.25 $(6,805.79) $- $(6,805.79)
20 $514,071.20 $518.18 $(7,323.98) $4,170.00 $(3,153.98)
21 $534,634.05 $538.91 $(7,862.89) $8,340.00 $4,647.11
22 $556,019.41 $560.47 $(8,423.36) $4,170.00 $8,256.64
23 $578,260.19 $582.89 $(9,006.24) $- $7,673.76
24 $601,390.59 $606.20 $(9,612.44) $- $7,067.56
25 $625,446.22 $630.45 $(10,242.89) $- $6,437.11

I start to believe paying an additional $20 dollars per month for a $16,680 savings in 20 years is not a bad deal.

Assuming that you don’t have a child, you might be able to take advantage of higher education at a later age.  Some companies, such as DELL, have a tuition reimbursement program to help you pursue higher education.

Let’s think about the future

Education cost is getting higher

ased on history, we’ve seen the cost of education is getting higher every year.  Bestvalueschools.com reported the price of higher education has been rising between 4% to 11% every year.

Percent changes in College tuition & fees from 1985 to 2009 (by BestValueSchools.com)

However, no one can predict the future.  It is certainly not easy to predict the future of education or job market 10 or 20 years from now.

The current education system might be obsolete in the next 10 years. Colleges and universities might replace all teachers with an interactive recording of the best teacher in the last decade.

This will certainly cut down the cost of education, right?

Well…. Who knows?  It will certainly cut the cost for a university to host a class, but the university might not pass those savings to the students.

Do you remember a price hike from airlines companies because of the higher gas price?  What happened when the gas price went down?

The price of the airline tickets did NOT go down.

Automation age is coming

If not education, what can the future generation rely on?  minimum wage, maybe?!

I’m afraid by 2030s; we won’t have the opportunity to protest for a high minimum wage anymore.

Why?  Because most of the routine, repetitive, and predictable jobs could easily be replaced by automation. (source: What jobs will still be around in 20 years? Read this to prepare your future)

My final verdict on ACC tax is Yes

Just to be clear, I’m not trying to convince anybody to vote yes on ACC annexation.  This is solely my opinion, and I am sharing my finding with other people that might find this beneficial.

I’m voting Yes to ACC annexation because of the following personal reasons:

  • Saving of $16,680 in education cost for 60 credit at ACC.  I have 3 kids, so I’m hoping to save at least $50,000.
  • ACC plans to offer a Bachelor degree in Registered Nurse.  According to Salary.com The starting salary of a registered nurse is $60,000.  My wife is thinking about pursuing this in the future.
  • Even if my kids and wife decided not to go to ACC.  I still hope that you’re kids, neighbors, or maybe yourself can benefit from a lower cost of higher education.

Your action today will impact the future.  What’s your vote?

 

Special Credits:

7 thoughts on “ACC Tax? Yes or No”

  1. So this tax is FOREVER so the 20 year story has no end for the paying parents. They will more than pay for full tuition by the time they are ready to retire and move to Florida to escape taxes. If you retire and decide to stay here then guess what you Social Security check pays ACC until the day you pass on to your heavenly reward. So this examination is full of flaws and skips over some very important information. ACC raises the rates almost every year so between the rates going up and house valuation going up you are going to pay one heck of a lot more than this opinion shows.

    Now if ACC were a well managed run, high performing institution with a great graduation rate then maybe. But throwing good money after bad is not a worthwhile investment. To say there are two campuses 20 minutes away then add in a car and all the expenses a car will have for that student(s) those parents send off to to ACC supposedly saving money. This is NOT A DEAL GOOD investment. Vote NO!!

    • Hi Nick,

      Thanks for sharing your concerns. In my analysis, I’m calculating the savings only (out-of-district tuition subtracted by in-district tuition). I know ACC will always increase their in-district tuition every year, and for sure they will increase the out-of-district tuition every year as well. Of course, I’m making an assumption the savings each student can get stays the same. And, I’ve considered the home price valuation going up at 4% per year in my analysis.

      I’ve been living in Pflugerville for 18 years now, and I’m only 44 years old. I’ve seen the price of my old house double in value and the tax too. I know for sure with this rate, we can’t live in Austin and the surrounding area for retirement, especially if you are relying on Social Security checks.

      Remember, the Pflugerville ISD tax in my example is 1.54% for every $100 value. When the house of the Joneses double in value to $500K (after 20 years, with 4% inflation rate), their Pflugerville ISD tax only is $7,700. And, their total tax of 3.06% without ACC tax will cost them $15,300.

      As I mentioned earlier, with $15,300 tax 20 years from now, I don’t think I can retire in Pflugerville, TX.

      As I also promote financial freedom education, one of the most common mistakes that retiree make is not downgrading their house, or move to another area that is more affordable.

  2. ACC might be worth it, if it was effective education. Have you reviewed how many students have succeeded from ACC?
    Check out the President Report of Austin Community College on August 13, 2018. Here is a video link https://youtu.be/9X9Iq8ilMkg in his own words.

    Summary:
    Graduation Rate 3.9% to 11%
    Enrollment from 45K to 41K
    Drop out rate from Fall to Spring 25%
    Drop out rate from 1st Fall to 2nd Fall 50%
    Core Completer 5%
    Associates Awards 4-8%
    Certifications 1-2%
    STEM Awards less than 1.5%

    Very few people succeed in ACC. Pflugerville only has 225 high school kids that go to ACC. The cost to Pflugerville would be $10 million the first year. That is $44K per student. Of those 225, only about 10% have historically graduated. So Pflugerville would be spending $455K per graduate. Is that really a good return on investment?

    • Thanks for sharing that video. The 50% drop off rate is crazy. It just shows many high schools graduates are lost, and they don’t think it is worth paying the high dollar tuition.

      However, I’m very curious about the graduation rate. I went to college for 2 years in San Diego, CA because I was not well informed, and still I didn’t have my Associate degree from the college. So, technically, I dropped out from college. I feel so cool, like a rebel now. 🙂 However, I got my Bachelor degree from UT-Austin.

      So, I quickly researched on ACC, San Antonio College, and Lone Star System college.
      Their graduation rates are 6%, 7%, and 11% respectively. (see the references below).
      However, among those colleges, ACC has the highest transfer-out rate of 32%. (23% for Lone Star System, and 18% for San Antonio College).

      I don’t understand how ACC calculate those rates in the video, but ACC certainly has the highest transfer-out rate because most students transfer to UT-Austin or other higher education institution. So, is that good enough?

      References:
      ACC: https://www.usnews.com/education/community-colleges/austin-community-college-district-CC00416
      San Antonio College: https://www.usnews.com/education/community-colleges/san-antonio-college-CC07470
      Lone Star College (Houston): https://www.usnews.com/education/community-colleges/lone-star-college-system-CC04734

      PS. By the way, how do you come up with $10 Million for the first year? Does the city of Pflugerville need to pay ACC an additional $10 million in addition to the property taxes?

  3. A follow on to Pflugerville Resident’s response…the cost to Pflugerville at $10 million in the 1st year is enough (with change left over) to pay for 60 credit hours (2 years) for 1800 graduating seniors (do we have that many total) and the students still would be paying their $5,100. So even with the argument that more students would choose go to ACC if we had in-district rates, it still is not a good return on investment. As a community, we would be getting ripped off.

    • Hi Concerned Citizen,

      I’m totally concerned as well if the City of Pflugerville needs to pay an additional $10 million on top of the annual tax.

      Do you know is that $10 million come from? Do you have any reference to mention $10 million in the first year?

      We should certainly share all the information that we have to empower people.

  4. There are so many ways to spin this to make it seem like a good idea. There an equal number of ways to spin this to make it seem like a bad idea. The reality is that an educated populace has a higher GDP. Making education available is valuable to the Pflugerville community. Trying to predict how many students, adults, or community members total is not going to be easy. A lot of adults attend ACC. I imagine that given a considerably lower or free tuition opportunity, the numbers might just surprise you. Let’s do the right thing for our community and add educational opportunities at dirt cheap rates. Maybe someone wants to start Pflugerville community college. I would be ok with that idea also, but let’s do something.

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