Understanding the District’s Tax Rate

A school district’s budget is generated from three sources: federal, state, and local funding. Local funding from property taxes makes up the largest source for school districts.

A school district’s total tax rate is made up of two parts: Maintenance and Operations (M&O) rate and Interest and Sinking (I&S) rate. Each has a designated purpose and budget.

The M&O budget is used for the daily operations of the district: utilities, salaries, supplies, and fuel.

The I&S budget is used to repay debt for capital improvements through voter-approved bonds: new construction, renovations, HVAC and roofing replacements, and land purchases.

Bond elections only affect the I&S tax rate. Proceeds from a bond CANNOT be used as part of the M&O budget or to increase salaries.

Estimated Tax Impact

If approved, the estimated maximum tax impact would be $0.12 for a total tax rate of $1.4771. The charts below compare current school district tax scenarios with potential scenarios that include the anticipated state homestead exemption of $40,000 and the tax rate increase if the bond is approved.

Over 65 Exemption

By state law, Shallowater ISD property taxes of residents 65 and older would not be increased by the bond election as long as the appropriate exemption applications have been filed with the local appraisal district. If you qualify your residence homestead for an age 65 or older or disabled person homestead exemption for school district taxes, the amount of school district taxes on that homestead cannot increase as long as you own and live in that home. The tax ceiling is the amount you pay in the year that you qualified for the age 65 or older or disabled person exemption. The school district taxes on your homestead may go below but not above the ceiling amount.