Starting October 23, MISD voters will encounter a proposal with counterintuitive ballot language. Prop A from Midway ISD will read:
Wait… why does it say a decrease?
If you have been keeping up with the national teacher shortage taking a toll on Midway ISD’s salaries and deficit budget, a ballot item with an 18.5¢ decrease to the tax rate and $2.4 million revenue decrease may be confusing. Hasn’t Superintendent Dr. Chris Allen been sharing the proposed $3.75 million increase to the operations budget to address teacher recruitment and retention?
As if the school finance structure was not confusing enough, the State dictates required ballot language and does not allow any clarification at the polls.
The “decrease” mentioned refers only to LOCAL TAX REVENUE. State funding will then fill not only the $2.4 million decrease, but also an additional $3.75 million overall.
A tale of two tax rates… and the state’s golden incentive
First, it is essential to understand we are discussing TWO tax rates that are added together. Texas public schools are primarily funded through two tax rates.
M&O: The Maintenance & Operations tax rate is used for annual operations, 85 percent of which is salaries. It is comparable to your home checking account.
I&S: The Interest & Sinking tax rate is used to pay debt from school bonds that built facilities. It is comparable to your home mortgage.
Neither tax rate can increase without voter approval.
An August Waco Trib article referred to MISD’s Voter-Approval Tax Rate Election (VATRE) proposal as a game of Jenga, and that is pretty accurate. There are multiple moving parts in a sequence over time that affect both tax rates. The sequential movement culminates in a decreased overall tax rate and potentially an increased overall budget impact.
The Prop A ballot language does not clarify that the $0.9392 tax rate would be the result of:
- two large drops to the M&O tax rate,
- a smaller increase to the same M&O rate, AND
- an equivalent decrease to the I&S rate, AND
- a district budget increase from the state’s “golden penny” yield, which functions sort of like an incentive to maintain certain tax rate levels.
Here are those actions in detail:
In 2019, the 86th Legislative Session scheduled a statewide tax compression to the Maintenance & Operations (M&O) tax rate to take effect in 2023. This was calculated at 8.91¢ for Midway ISD.
In the most recent legislative session (88th in 2023), an additional statewide M&O tax compression gave MISD taxpayers another 9.63¢ decrease.
Then, in August 2023, the MISD Board of Trustees discussed utilizing the state’s last three “golden pennies” available to the district, which would mean a three cent increase to the M&O tax rate… or rather, a decrease by a lesser amount than the state’s 18.54¢ compression. To ensure that MISD taxpayers could experience the full benefit of the 18.54¢ reduction, the MISD Board lowered the district’s other tax rate, the Interest & Sinking (I&S) by an equal three pennies.
In November 2023, the final step of this plan is up to voters. The three cent M&O increase (along with the additional state yield incentivizing use of the “golden pennies”) is on the ballot. This would generate an overall increase to the district’s operating budget of $3.75 million intended to address teacher recruitment and retention, which in turn affects the ability to staff student programs.
To summarize the ballot
How to learn more
Because this is a complicated topic in terms of structure, multiple actions over time, and the resulting financial situation, MISD has established multiple ways to learn more in a deeper dive.
Visit www.midwayisd.org/taxes for VATRE information including:
- Videos
- News articles
- Publications
- Dates of public meetings
- Financial efficiency audit
- Frequently asked questions
- Salary comparisons
- Tax rate history
- McLennan County tax rate comparisons
- Ballot language
- Election details
We also launched a Financial Transparency web presence in June. Visit www.midwayisd.org/financial-transparency for details on:
- Revenue
- Expenditures
- Budgets
- Monthly and annual reports
- Debt service
- Tax information
- Financial integrity rating
