UnRAPPed | The Buckets of School Funding

  • LISD believes in the importance of all stakeholders understanding the basics of how our district receives its funds, and where the funds are being allocated once they are collected. School finance is a complicated topic, but we’ve broken down a few important topics to give the community a snapshot of how public school funding works in Texas. In LISD, we advocate for as much of the taxpayer dollars as possible to remain in our district where they benefit the communities we serve.

    The Buckets of School Funding

  • The school finance system in Texas is complex, so let’s break it down. 

    First, it’s important to understand the way schools receive money is split into two different revenue streams funded by taxpayer dollars, which we’ll represent with a blue and yellow bucket. LISD’s tax rate is currently a dollar thirteen, and is split into these two buckets of funds. Seventy four cents of our tax rate supports the Maintenance and Operations, or M&O, side of our budget; while thirty eight cents of the tax rate funds our Interest and Sinking, or I&S budget. 

    Let’s start with the blue bucket, which represents the M&O budget. The size of our blue bucket is determined almost entirely by legislators through the basic allotment. It represents how much money we are allocated to educate each student in LISD. The blue bucket is filled with funds through two primary sources, local property taxes, which make up about 86 percent of our M&O budget; and state funds, which are generated by things such as sales taxes, business taxes and lottery proceeds. 

    The blue bucket contains the money that can pay for the daily operations of the school district, such as teacher and staff salaries, fuel, electricity, and insurance. The size of the blue bucket has not been adjusted by lawmakers since 2019 amid soaring inflation rates, which have increased on average by 22 percent. In order to have the same buying power in 2023, the basic allotment, or the size of the blue bucket, would need to increase to 7,515 dollars. 

    The amount of money the state contributes to a district’s M&O budget is contingent upon the amount of revenue collected by local property taxes. If local property values set by the county appraisal district rise and tax collections increase, which has been the case over the last several years in LISD, local schools DO NOT receive more funding. Instead, the state simply contributes less money to fill the blue bucket.

    If the amount of funds a school district collects exceeds the size of the blue bucket, those funds funnel back to the state in the form of recapture. The intent of recapture is to redistribute funds from districts that exceed their entitlement to districts that do not meet their entitlement. Instead, the recapture funds fall into the state’s general budget, with no transparency on how or where it’s being used. 

    And remember, school districts cannot use any funds received from a bond election to pay for daily operating expenses, which include staff salaries. That brings us to our yellow bucket.

    The yellow bucket represents funds that are used to pay off bond debt that has been approved by voters through the Interest and Sinking, or I&S, portion of the tax rate. A school district’s I&S tax rate is set by local school boards, and is determined by how much revenue is required to pay off bond debt. The yellow bucket of funds can only be used to support major facilities repair and renovation, and construction projects that are proposed in bond elections. Every facility we have in LISD was built with bond funds - every stadium, school building, competition field, and more. Funds in the yellow bucket are not subject to recapture, which means 100 percent of funds from the I&S side of the tax rate stay in the district.

    LISD is able to take on the proposed bonds in the spring 2024 election with no change to the I&S tax rate. UnRapp more about how school debt affects the tax rate in another episode of this series. Lewisville ISD residents are eligible to vote in the Bond election. Early voting runs from April 22 through April 30, and election day is May 4th.

    It’s important to understand that the state of Texas has set up the school finance system this way, and the only way for lawmakers to address school funding to keep up with inflation is for them to increase the basic allotment. 

    And that’s the buckets of school funding, UnRapped!