In Texas, if a school district adopts a budget and corresponding operations tax rate that is above what the state calculates for the district, voters must approve the higher operations rate in order for it to take effect. With the conclusion this summer of the 2025 legislative session, Hays CISD has a clearer picture of the operating revenue that will be provided to the district under the state’s basic funding formula. In that context, the district will likely ask voters in November to consider a tax rate ratification election (TRE).
School Funding in Texas
Texas schools are funded primarily through two taxing streams – (1) the interest and sinking (I&S) tax and (2) the maintenance and operations (M&O) tax.
The I&S tax is generally reserved for debt service issued on bonds to finance capital expenses like buildings, buses, equipment, and tangible long-term assets. Most voters are familiar with I&S funding through school bond elections. In fact, Hays CISD voters just approved a bond in May to build the district’s fourth comprehensive high school, among other important projects. The Hays CISD I&S tax rate would not increase, as promised, with a TRE.
The M&O tax covers the operating expenses for the district – teacher and staff salaries, insurance, utilities, bus fuel, supplies, student activities and projects – everything paid for by the district’s general operating fund. The M&O rate is calculated for Hays CISD by the Texas Education Agency through a series of funding formulas that take into account student attendance and the different needs of certain student groups.
Operational Funding Pressures in Hays CISD
Because state funding has not kept pace with inflation since 2019, Hays CISD expects to consider setting a higher M&O tax rate than the state has determined for the district. Many other districts in Texas in recent years have employed this funding approach in order to maintain operations, attract and retain valued teachers and staff by continuing to offer competitive salaries and benefits, and to continue to provide important educational services for students.
The Specifics Being Considered for a Hays CISD TRE
In August, Hays CISD leadership, in consultation with the district’s financial advisors, will calculate whether a TRE is something worth asking voters to consider. The TRE could include an increase of up to 12 pennies on the M&O tax rate that could generate as much as $24 million in additional operational revenue. This money could be used for items such cost-of-living raises for employees who were not included in this year’s legislative funding, maintaining educational programming, and other costs to support operating schools.
The process would involve: a notice in the newspaper, a public hearing on the matter, and a Board of Trustees vote on whether to call for a TRE election based on the tax rate they choose to set. The deadline to call for this election for the November 2025 ballot is August 18, 2025. If the proposed higher tax rate goes to voters to consider, voters would cast their ballots for or against the tax rate on November 4, 2025.
Additional Information
In addition to potentially raising more operational revenue, should voters approve a TRE, the district intends to continue to find ways to cut operational expenses. Examples include eliminating additional positions through attrition, selling surplus district property, increasing capacity at our current campuses, and possibly delaying opening future schools to postpone the impact adding new campuses has on the operating budget.