What makes up a district tax rate?
A school district’s tax rate comprises Maintenance and Operations (M&O) and Debt Service (I&S). M&O taxes finance the General Operating Fund, which covers the District’s routine operating expenses, including salaries, supplies, utilities, insurance, equipment, and other costs. The Debt Service tax pays for school bonds and can only be used to repay the principal, interest, and expenses of bonds issued for particular purposes. Each year, usually in September, the Board of Trustees approves the tax rate.
What makes up a public school district budget?
The M&O fund finances the school district’s day-to-day operations, including expenses like salaries, utilities, and supplies. The I&S fund pays off the bonded indebtedness. School districts conduct bond elections to secure authorization from local voters to issue bonds and levy taxes for repaying the bonded indebtedness. The proceeds from the bond sale are for constructing and improving facilities, and purchasing equipment, furniture, or land. However, the funds collected from the I&S side of the budget cannot be used for maintenance and operations expenses. According to Texas law, using I&S funds to pay teacher salaries is not permissible.
What are fund balances?
School districts must employ “governmental fund accounting” to keep track of their funds. In Texas, school districts usually maintain various types of fund accounts, each comprising three components: assets (economic resources of the fund), liabilities (financial obligations of the district associated with a particular fund), and fund balance (the remaining value of assets after accounting for liabilities).