What makes up the total Maintenance and Operations (M&O) tax rate?
There are two tax rate elements that combined equal the maintenance and operations tax rate, which are the Tier 1 and Tier 2 tax rates. 

As a result of House Bill 3, the school finance law, passed during the 86th legislative session, the Tier 1 M&O tax rate is $0.6790. This is set by the state and is based on July certified property values. This year, the Tier 1 M&O tax rate was calculated by the Texas Education Agency (TEA) based on an increase in property values plus an additional 10.7 cent compression required by legislation passed during the 88th Legislative Session, making this the largest tax rate reduction since 2007.

The Tier 2 M&O tax rate consists of what are referred to as Golden Pennies that may not be recaptured by the state through Robin Hood, which is part of the school finance system that requires GCISD to send a portion of its local property-tax revenue to the state. For the 2024-2025 school year alone, an estimated 24 percent ($36 million) of GCISD’s Maintenance & Operations tax levy will be sent back to the state in the form of recapture.

The state has set a maximum Tier 2 M&O tax rate of five cents without voter approval. Trustees voted to take the opportunity to bring the Tier 2 M&O tax rate from four cents to five cents, or five Golden Pennies, not subject to recapture. One-hundred percent of the funding through this Tier 2 M&O tax rate will remain in GCISD.

*This tax rate is pending VATRE approval.

Can GCISD access the remaining “golden pennies” through a Voter Approved Tax Rate Election (VATRE)?
HB3 allows districts to hold a Voter Approved Tax Rate Election (VATRE) to gain access to the remaining three golden pennies. These golden pennies are not subject to recapture, meaning 100% of these funds stay in GCISD. If voters were to pass a VATRE, the three-cent increase to GCISD’s Maintenance and Operations (M&O) tax rate would generate approximately $6 million in funding for school district operations.

How much additional funding is available to school districts through a Voter Approved Tax Rate Election?
Under current law, GCISD can access a total of 12 additional cents through three golden pennies and nine copper pennies. A copper penny is funding that is available to school districts once they have accessed all of the golden pennies. As illustrated above, the three golden pennies are not subject to recapture. If voters approved accessing the nine “copper pennies”, those additional funds would be recaptured at a rate of 63%, meaning under current law $0.63 cents of every dollar would be sent back to the State.

Can the District use Maintenance and Operations funds to pay down debt?
Current law dictates that school districts may not increase the maintenance and operations tax rate in order to create a surplus for the purpose of paying the District’s debt service. This is known as a “swap and drop.” However, the law does allow districts to ask voters to approve an increase in the M&O tax rate and to lower the Debt Service tax rate, as long as the district has sufficient Debt Service tax collections to make annual bond payments.