ACC Tax? Yes or No

Analysis on ACC Tax

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.

Description Tax Rate per $100 Tax for a $244,000 value house
Travis County 0.369000 $900.36
Pflugerville ISD 1.540000 $3,757.60
Travis Central Health 0.107385 $262.02
City of Pflugerville 0.539900 $1,317.36
Travis County ESD #2 0.100000 $244.00
Travis County MUD #15 0.407500 $994.30
Total before ACC 3.063785 $7,475.64
ACC 0.100800 $245.95
Total w/ ACC 3.164585 $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

Year Home value with 4% increase / year ACC Tax Cummulative ACC Tax Saving from In-District tuition Total
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: