VATRE 2024

A Voter-approval Tax Rate Election (VATRE) is a special election called by a school board, asking voters to approve (or ratify) the tax rate previously adopted by the school board, which includes an increase to the maintenance and operations tax rate to increase local school funding. 

The school board adopted a maintenance and operations (M&O) tax rate for the current fiscal year above the voter-approval tax rate, automatically requiring the school board to call the VATRE for the Texas City ISD voters to approve (or ratify) the M&O tax rate.  The school board adopted a $5 million budget deficit for the 2024–25 school year. Over the last six years, funding for educational expenses — such as salaries, utilities, fuel, insurance, and other expenses — has not kept up with inflation. Despite Texas’s $33 billion budget surplus, virtually no additional per-student funding was approved during the last 88th Legislative Session. Texas City ISD has also seen new state mandates without additional funding, such as legal requirements for school resource officers at every campus and accelerated instruction for students. 

It is anticipated that the VATRE would generate an additional $3.5 million if voters were to approve the VATRE.  However, it is anticipated that Texas City ISD would have to remit money to the State for “recapture”, resulting in a net of $1.5 million for Texas City ISD annually.

The adopted $5 million deficit budget included:

• $2.8 million on a compensation plan that included market adjustments for many teachers and staff members. 
• $300,000 for an increase in the District’s contribution to health insurance ($28 per month per employee)
• $900,000 for an increase in property insurance premiums
• $500,000 increase in utilities based on new electricity rates and past usage

If the VATRE does not pass, the tax rate will decrease by .063 cents, for a total rate of $1.1005. No additional funding will be generated for Texas City ISD.  However, if the voters approve the VATRE, the total tax rate will decrease by .032 cents, for a total tax rate of $1.1322. Approval of this tax rate would generate $1.5 million in additional funds for Texas City ISD.

Rising prices, competitive compensation and lower attendance rates post-pandemic, all play a role in the school funding challenges across the state. Since 2019, there has been no increase to the basic state allotment — currently $6,160 per student — which is the amount the state allots for each student in a district. According to data released by the state’s Legislative Budget Board (LBB), in 2022, per-student spending in Texas has decreased by $590 in inflation-adjusted dollars over 10 years. The LBB reported that the state share of public education has decreased over the years, while the percentage of local spending has increased.  There has also been an increase in recapture paid to the state by school districts considered to be property wealthy. The state uses these recapture dollars to help balance the rest of the state budget.

The Texas Association of School Boards indicates that these per-pupil dollars include funding that is not provided to school districts nor affects the classroom, including funds to pay down local property taxes and investments in the Teacher Retirement System insurance program. 

When a school district collects more revenue on property taxes then the finance formula says they are entitled to, those excess dollars are recaptured. Recapture dollars are intended to help fund less wealthy districts, but currently the funding brought in through recapture helps supplant the required funding from the State for education.  According to the Texas School Coalition, when the state collects more local property tax dollars for state use through recapture, dollars that would otherwise be spent on education are reduced, allowing the state to spend more General Revenue dollars on other priorities instead. In other words, when districts with high property wealth per student pay more in recapture, districts with less property wealth do not benefit by receiving more funding. Recapture payments has grown from about $120 million in 1992 to over $5 billion now.

If the VATRE is approved, Texas City ISD would be estimated to pay about $1.7 million in recapture to the State.

The Texas City ISD tax rate is made up of two parts, Maintenance and Operations (M&O) and Interest and Sinking (I&S). The M&O provides funding for the daily operations of the district including payroll, supplies, materials, contracted services and other general expenses. The I&S is used to pay for voter-approved bond programs that fund new construction, technology and vehicles. 

The M&O rate is made up of three parts. The first, Tier 1, is the basic amount of funding for each district. This is based primarily on student attendance and the specific needs of each district’s student population. 

The second part is Tier 2 “golden” pennies. Currently Texas City ISD has all available golden pennies.  This is considered enrichment funding and is not subject to recapture, so Texas City ISD keeps all the money generated from golden pennies. 

The last part is Tier 2 “copper” pennies. Texas City ISD is requesting an additional 3.17 copper pennies to bring the total copper pennies to the maximum amount of nine (9) additional copper pennies. This is also considered enrichment funding, but any amount generated over a certain amount is subject to recapture by the state. 

The state uses a tool called “compression” to lower Tier 1 rates of M&O. This provides tax relief to property owners when property values increase. In future years, our tax rate may continue to decrease due to compression.

Homeowners ages 65 and older and those who are disabled would not be affected if voters approve Texas City ISD's VATRE if they have filed for and received an Over 65 or Older or Disabled Persons Homestead Exemption through their local appraisal district.

The Efficiency Audit is a requirement for the VATRE (Voter-Approved Tax Rate Election). A VATRE cannot take place without this audit, which is designed to promote transparency for voters. It assesses the district's financial and operational efficiency and must be published on our website for the public to review before the election. This ensures that voters have access to important information to make informed decisions.

Review the Efficiency Audit