School districts are subject to a different set of laws and requirements than other taxing entities. Legislation passed in 2019 decreased the percentage of local Robin Hood taxes that school districts such as GCISD must send to the State. But even with that reduction, the State will still collect millions of dollars of local tax revenue paid by GCISD taxpayers. Cities, counties, and other local entities are not subject to Robin Hood.
Adopting a Budget and Tax Rate
Local officials in cities, counties, school districts, and special purpose districts (such as hospitals, junior colleges, or water districts) adopt tax rates on an annual basis that are applied to the appraised values of all nonexempt property in the state. Each taxing unit must determine the level of revenue required to provide services and pay for voter approved bonds.
The taxing entity’s effective tax rate is established based on the tax rate required to generate the same amount of revenue in the previous year on properties taxed in both years; therefore, if property values increase, the effective tax rate will decrease, or if property values decline, the effective tax rate will rise. The actual tax rate is determined by the budget that is adopted by the governing body of the taxing entity.
In a Robin Hood district, it is important to note another term: the “rate to maintain.” The school district’s rate to maintain tax rate is established based on the tax rate required to generate the same amount of tax and state revenues (this includes additional revenues needed to make Robin Hood payment to the State) in the previous year on properties taxed in both years. The Rate to Maintain and the Proposed Rate are published each year prior to the budget and tax rate adoption.
The table below lists the Effective Tax Rate, the Rate to Maintain Tax Rate and Adopted Tax Rate for GCISD for the past 5 years:
| GCISD Tax Rate History |
| 2017 |
$1.3093 |
$1.4860 |
$1.3967 |
| 2018 |
$1.3277 |
$1.4799 |
$1.3967 |
| 2019 |
$1.3135 |
$1.3799 |
$1.3267 |
| 2020 |
$1.3149 |
$1.3377 |
$1.3031 |
| 2021 |
$1.3276 |
$1.3202 |
$1.2751 |
Tax Rate
School districts and cities fall under different laws when it comes to adopting a tax rate. Cities have flexibility in setting their tax rate, whereas a school district M&O tax rate is capped by the State. Legislation that the Governor signed into law in June 2019 requires school districts to lower their M&O tax rates.
The M&O tax rate is broken up into two tiers and HB 3 made changes to the calculations of both tiers. The Tier 1 tax rate is based on the growth or decline in local and statewide property values. This tax rate is calculated by the State and not GCISD. Based on a 0.49% increase in property growth for 2021, GCISD’s 2021 M&O Tier 1 tax rate decreased from $0.9164 cents to $0.9134 cents. The Tier 2 tax rate was capped at $0.04 cents by Legislation in 2019. The State gave some flexibility to increase this rate by $0.01 cent beginning with the 2020 tax year. The Tier 2 tax rate contains what are considered “golden pennies,” which means that 100% of the revenue raised from this portion of the tax rate stays in GCISD and is not subject to Robin Hood. However, any tax collections from the Tier 2 tax rate are offset with a reduction in Formula Transition Grant state funding.
Beneficiaries of Local Tax Revenue
When local taxing entities other than school districts assess a tax on property owners in their jurisdiction, the tax revenue collected goes toward paying for services and the repayment of local debt within that city, county, or special purpose district. In other words, dollar for dollar, the taxes collected directly benefit the taxing entity in which the taxpayer’s property is located.
For school districts, however, a different set of circumstances exists under state law. The law says that some school districts, such as GCISD, are not able to keep all the revenue collected from local taxpayers.
During the 2021-20202 school year, GCISD is estimated to pay approximately $51.2 million to the State, which is over 33 percent of estimated M&O tax collections. This means that over 33 percent of what GCISD will collect for the M&O taxes of the District will not be used in the local schools, but rather contributed to the State. A taxpayer with an average 2021 home value of $401,557 will pay approximately $5,120 in school taxes, and $1,273 of that tax payment will be taken out of GCISD and sent to the State. The example below shows the breakdown of the estimated 2021 taxes paid on the 2021 average home value within GCISD.
| GCISD 2021 Tax Rate Breakdown |
| M&O - Retained by GCISD |
$0.6364 |
$2,555 |
49.90% |
| M&O - Recaptured by State |
$0.3170 |
$1,273 |
24.86% |
| Total M&O |
$0.9534 |
$3,828 |
74.77% |
| I&S Tax Rate (voter-approved) |
$0.3217 |
$1,292 |
25.23% |
| Total M&O and I&S |
$1.2751 |
$5,120 |
100.00% |
GCISD does not receive State funding for facilities or other capital outlay needs. The voter approved bond programs in GCISD provide funding for these needs. Local voters have approved a portion of the total 2021 tax rate of $1.2751 to cover the cost of the District’s bonds. That portion is currently $0.3217, or 25.22 percent of the total 2021 tax rate, and 100% of bond tax collections remain in the local community and are not sent to the State. Tax collections above the current year bond obligations are used to pay the principal on bonds early, which saves taxpayers future interest costs.