INSIDE INFORMATION
In Texas’ 86th Legislature in 2019, lawmakers approved House Bill 3, a comprehensive school nance reform that went into e ect Sept. 1, 2019. Among HB 3’s changes was a compression on property tax rates: If property values rise statewide or locally, districts must reduce their tax rate to help ease the burden on local property owners. EXPLAINING SCHOOL FINANCES
STATEWIDE PROPERTY TAX CALCULATIONS
Local property taxes are composed of an interest and sinking tax rate, or I&S, and a maintenance and operations rate, or M&O.
The I&S is used for a district’s debt service on voter- approved bonds for facilities.
The M&O includes districts’ basic level of funding and its enrichment fund, which are used for regular school operations, such as teacher salaries.
District’s total property tax rate
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COMPILED BY SAVANNAH KUCHAR
SOURCES: RAISE YOUR HAND TEXAS, EVERY TEXAN, TEXAS EDUCATION AGENCY, LEGISLATIVE BUDGET BOARD COMMUNITY IMPACT NEWSPAPER
COMPONENTS OF HOUSE BILL 3
M&0 property tax rates (per $100 valuation), scal year 2021-22
In its rst two years, HB 3 invested $11.5 billion into public school nance reform.
$1.0671 Statewide maximum for most districts with voter approval $1.0354 Statewide maximum without voter approval
$5 billion went to property tax relief by subsidizing decreases in local revenue following statewide compressions on local districts’ property tax rates.
If statewide property value growth exceeds 2.5% in a year, the tax rate for districts will be compressed. If a district’s growth is higher than the state’s growth, the district’s rate will be furthered compressed. Districts can add a maximum of roughly $0.13 to their compressed rate before seeking voter approval.
$6.5 billion was used to bolster school funding by increasing the basic allotment, in turn raising the majority of districts’ entitlements. A portion of this increase was speci cally meant for raising teachers’ and other sta ’s salaries.
$ 11.5 B total invested
$0.8971 Statewide compressed rate
$0.8074 Statewide minimum
STATE VS. LOCAL SHARE
Texas’ public school system is funded largely by state aid and local property tax revenue. Prior to HB 3, the local share grew as property values increased statewide, but with the legislation, the state now takes on a larger portion year over year.
$60B $50B $40B $30B $20B $10B $0
CLEAR CREEK ISD PROPERTY TAX RATES
Clear Creek ISD’s maintenance and operations tax rate and interest and sinking tax rate were both mostly at from at least the 2012-13 school year until House Bill 3 took e ect in 2019-20, lowering the M&O rate.
*2019 IS ESTIMATED, WHILE 2020 AND 2021 IS PROJECTED. State share Local share
M&O rate I&S rate HB 3
$0 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20
“IT’SREALLYNOTPROPERTY TAXRELIEF; IT’STAXRATE COMPRESSION. THESTATE JUSTKEEPSBUYINGDOWN THATTAXRATE, ANDTHE TAXPAYERENDSUPPAYINGON AVERAGEABOUTTHESAME IN TAXESTHATTHEYHAVEBEEN.” BOB POPINSKI, DIRECTOR OF POLICY AT RAISE YOUR HAND TEXAS
$1.04
COVID 19'S EFFECT ON SCHOOL FUNDING
$0.94
Most districts were held harmless by the state for any enrollment changes during the pandemic, so funding entitlements were not negatively a ected by attendance changes. Federal funding gave three rounds of aid to address pandemic-related disruptions. The packages amounted to $19.2 billion , of which:
$0.32
$0.33
$ 15.14 B will be distributed back out to districts.
$ 1.91 B will be reserved by the state for statewide programs.
$ 2.15 B was used by the state for the hold-harmless program.
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