Bonds 101

  • What is a bond?
    A bond is a debt investment in which an investor loans money to a school district, with interest, for a defined period of time. Essentially, it’s similar to a family taking out a mortgage for the purchase of their home.

    School districts issue bonds to pay for “big ticket” capital needs (i.e. new facilities, renovations, land, technology, etc.)

    School Finance: The Big Picture

    A school district’s budget is generated from three sources:

    • Federal funding
    • State funding
    • Local tax effort (generated from property taxes, not sales tax)

    We UnRAPPed more on this topic at LISD.net/unrapped.

  • M&O Tax Rate
    Maintenance and Operations (the general fund)

    Funds the day-to-day maintenance and operations of the district:

    • Salaries (for teachers and other staff)
    • Bus repairs, maintenance and fuel
    • School supplies and materials
    • Utilities (electricity, water, etc.)

    For the average citizen, this is similar to:

    • House repairs
    • Car fuel
    • Routine services
    • Groceries
    • Cleaning Supplies
    • Utilities

    School district M&O budgets support personnel salaries and related costs.
    The Annual District Budget is passed by the School Board of Trustees.

    The state caps the M&O tax rate at various amounts per $100 of property value.
    If a district wants to raise the rate beyond the current cap, it requires voter approval through the holding of a Voter-Approval Tax Rate Election (VATRE).

    Current LISD M&O Tax Rate:
    $0.8559

  • I&S Tax Rate
    Interest and Sinking (debt service)

    Funds debt repayment for “big ticket” items:

    • New building construction
    • Existing building renovations
    • Land purchases
    • Program-specific equipment
    • Technology
    • School buses

    For the average citizen, this is similar to:

    • New home purchase
    • House renovations
    • Land for a home
    • New appliances
    • New home computer
    • New car

    I&S funds may only be used to repay debt. 
    They cannot be used for salaries, utilities or other day-to-day expenses.

    Current LISD I&S Tax Rate:
    $0.3809