We know school finance can be complex. That’s why we created this FAQ hub to answer the most common questions about taxes, state funding, compensation, and how dollars are used to support our students and staff.
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💰 Taxes & Property Values
💰 Taxes & Property Values
What is MISD’s current tax rate?
For 2025–26, the MISD tax rate is $1.0912 per $100 valuation ($0.7169 M&O + $0.3743 I&S). This is nearly 28 cents lower than in 2019.
Click here for MISD's Tax Rate History.
Does the school board set my property value?
No, the Board of Trustees does not determine the value of your property.
Property values are set by your County Appraisal District (CAD)—not the school district. The appraisal district is responsible for determining the market value of homes and properties in the county each year.
Here’s how the process works:
Who Determines Property Value?
Your local County Appraisal District (CAD) (e.g., Montgomery CAD) appraises the value of your property annually based on market conditions.
Property owners receive a Notice of Appraised Value from the CAD each spring.
What Does the School District Do?
The Board of Trustees sets the school tax rate each year based on budget needs and legal limits.
That tax rate is applied to the appraised value from the CAD to calculate your school property taxes.
The district has no control over property appraisals or how much your property is worth.
Why did my tax bill increase if the rate went down?
If the value of your property increases at a greater rate than the tax rate is reduced, tax bills can still increase.
What is the 'No New Revenue' Rate?
The No-New-Revenue (NNR) tax rate is the rate a taxing entity, like a school district or county, would adopt to collect the same total tax revenue as the previous year, excluding new property. If tax revenues were the only source of funding for a school district, this rate might provide useful information to the taxpayer. However, this rate fails to address the inverse relationship between state funding and local funding. As a result, the rate can be very misleading when trying to compare the total revenues received by a school district from one year to the next. While it may seem appealing, it isn’t always practical. Because Texas uses a two-tax-rate structure for school districts—Maintenance & Operations (M&O) for daily expenses and Interest & Sinking (I&S) for repaying bonds—holding revenue flat can limit a district’s ability to fund growth, facility upgrades, or safety improvements. The state does not provide funding for new facilities to accommodate enrollment growth or for improvements for existing facilities, so relying solely on the NNR rate could force cuts to programs or staff, deferred maintenance, or larger class sizes, making it an unsustainable choice for school districts.
Are senior citizens protected from school tax rate increases?
Yes. Texans 65+ or disabled can apply for a tax ceiling that freezes their school district tax bill at the level it was the year they qualified.
🎒 How Texas School Finance Works
🎒 How Texas School Finance Works
What is Tier I and Tier II funding, and the "Maximum Compressed Rate"?
Tier I
Purpose: Intended to provide the foundation for every student’s education, covering essential programs such as teacher salaries, classroom instruction, and core campus needs.
Funding: Combines state funding and local M&O tax revenue, ensuring all districts receive a guaranteed level of funding per student.
Impact: Tier I guarantees that every student has access to a strong basic education, no matter where they live.
Tier II
Purpose: Supports enhancements beyond the basic program, like advanced courses, smaller class sizes, higher teacher salaries, and innovative programs.
Local Control: While the Texas Education Agency calculates each district’s Maximum Compressed Rate (MCR), which effectively determines the limit for Tier I funding, districts and local communities decide Tier II funding levels and the M&O tax rate above the MCR.
Impact: This system allows districts to tailor funding to local priorities, giving communities the flexibility to invest in what matters most for their students.
Maximum Compressed Rate (MCR)
Definition: The tax rate limit for Tier I funding, set individually by the Texas Education Agency.
Relationship to Tier II: Any local M&O tax rate above the MCR goes toward Tier II funding, which districts and their communities control.
Bottom line: Tier I ensures a solid educational foundation for all students, while Tier II empowers local communities to decide how much additional funding to invest in their schools, keeping control in the hands of the people who know their students best.
How is Tier I Funding Determined?
Tier I is intended to provided the foundation of funding for every student’s education, and the amount a district receives is based on student enrollment, student needs, and actual attendance:
Number of students: More students mean more resources, ensuring schools can staff classrooms and provide programs to meet demand.
Type of student (weighted students): Some students require additional support—like those in special education, bilingual/ESL programs, or at-risk students. These students are assigned weights, which increase the district’s funding to match the level of resources they need.
Attendance: Funding is based on students who are actually in school, rewarding districts that maintain strong attendance.
Think of Tier I funding like a glass of water:
The size of the glass is set by the number of students, their weights, and attendance—larger glass for more students or higher needs.
The glass is filled with a combination of local and state dollars.
The state looks at local property values to determine how much of the funding can come from local taxes versus state contributions.
High property values: The district can cover more locally, so the state contributes less.
Low property values: The state contributes more, ensuring all districts can provide the basics.
In short, Tier I ensures that every student has access to a strong foundation, while funding adjusts based on district size, student needs, and property wealth—giving districts both the resources and the flexibility to serve their students effectively.
What are Golden and Copper pennies in school finance?
Golden Pennies (Tier II, Level 1)
Definition: The first eight pennies of a school district’s Maintenance & Operations (M&O) tax rate above the state-calculated Maximum Compressed Rate (MCR).
Key Features:
Revenue from these pennies is not subject to recapture, meaning all funds stay within the district.
Each golden penny is equalized by the state, ensuring a guaranteed yield per weighted student.
The first five golden pennies can be adopted by the school board without voter approval. The remaining three require voter authorization through a Voter-Approval Tax Rate Election (VATRE).
Copper Pennies (Tier II, Level 2)
Definition: Any additional pennies of the M&O tax rate above the eight golden pennies, up to a statutory cap of $1.17 per $100 of taxable property value.
Key Features:
Revenue from these pennies is subject to recapture, meaning a portion is sent back to the state if it exceeds the district’s Tier II entitlement.
The state guarantees a lower yield per weighted student compared to golden pennies.
All copper pennies require voter approval through a VATRE.
What is recapture ('Robin Hood')?
Recapture, or “Robin Hood,” is a system in Texas that requires "property-wealthy" school districts to send part of their local tax revenue to the state to support other districts across Texas. While it is intended to provide more equitable funding across the state, it also limits how much local districts can invest in their own schools. MISD has sent nearly $10 million to the state under this law since 2013.
How does the Comptroller’s Property Value Study affect MISD?
The Comptroller audits appraisal values annually. If local values are too low compared to state-determined values, MISD can lose revenue.
🧑🏫 Compensation & Staffing
🧑🏫 Compensation & Staffing
How has MISD used Prop A funds?
Balanced the budget: Prop A eliminated the district’s budget deficit.
Invested in staff: Provided salary increases for all employees.
Reduced class sizes: Hired additional teachers and paraprofessionals to support classrooms.
Enhanced safety: Increased stipends for police officers serving MISD campuses.
Recognized employees: Issued a $500 stipend to every MISD employee.
What raises did staff receive in 2025–26?
Teachers: 5–9% raises (starting teacher pay: $60,285).
Support staff: 6%.
Administrators: 4%.
Substitutes: +$5/day.
All staff: $500 stipend in December.
Healthcare contribution increased to $400/month.
🏤 Bonds, Buildings & Facilities
🏤 Bonds, Buildings & Facilities
🤝 Accountability & Transparency
🤝 Accountability & Transparency
How does MISD compare to peer districts?
An efficiency audit showed MISD has more teachers, fewer administrators, lower turnover, and spends more on instruction than peer districts.
How does MISD ensure fiscal responsibility?
MISD balances its budget, monitors fund balance health, and builds compensation conservatively to avoid over-commitment.
What does the I&S tax rate fund?
The Interest & Sinking (I&S) tax rate generates funding used only to repay bonds for major capital projects.
These projects include new schools, campus renovations, technology improvements, and safety upgrades.
By law, I&S funds cannot be used for salaries, classroom supplies, or day-to-day operating expenses.
What happens if a bond election fails?
If voters reject a bond, the district cannot issue bonds to fund planned projects.
Critical facility upgrades—such as roof replacements, HVAC systems, and other maintenance—would instead have to be paid from the district’s general fund.
This shift strains day-to-day operations and limits the district’s ability to maintain competitive employee compensation and classroom support.
What projects were funded by the 2022 Bond?
New Creekside Elementary, comparability upgrades and renovations at all campuses, a CTE & Ag Science Center, phase two of Lake Creek High School, athletic stadium upgrades. The 2022 bond program has been delivered under its overall budget.
🏫 Understanding School Funding
🏫 Understanding School Funding
Where does MISD’s funding come from?
For the 2025-26 general fund budget, about 64% of MISD’s funding comes from local property taxes, 36% from the state, and less than 1% from federal funds.
What’s the difference between M&O and I&S?
Maintenance & Operations (M&O): Day-to-day costs like salaries, transportation, and classroom resources.
Interest & Sinking (I&S): Debt payments for voter-approved bonds for new schools and facilities.
Why is funding based on attendance and not enrollment?
State funding is primarily tied to Average Daily Attendance (ADA). If students are absent, MISD receives less funding even though costs remain the same.
What is the basic allotment?
The basic allotment is $6,215 per student, increased from $6,160 through HB 2 in 2025.
What other new funding did HB 2 provide?
House Bill 2 (HB 2), signed into law in July 2025, is a comprehensive $8.5 billion education funding package aimed at addressing critical needs in Texas public schools. Key provisions include:
Teacher Retention Allotment (TRA): Provides $2,500 for teachers with 3–4 years of experience and $5,000 for those with 5+ years in large districts. Districts with Enhanced Teacher Incentive Allotment (ETIA) status may distribute these funds based on performance evaluations.
Support Staff Retention Allotment (SSRA): Allocates funds to non-administrative staff, including counselors, librarians, nurses, teaching assistants, custodians, and bus drivers. Statewide, the SSRA provides approximately $45 per student to districts to fund these raises.
Special Education Funding
HB 2 introduces several measures to enhance special education services:
Increased Special Education Allotment: HB 2 mandates a statewide increase of approximately $615 million in special education funding for the 2025–2026 school year. This adjustment is intended to better align state funding with the actual costs incurred by districts in providing special education services. Districts will begin to receive this additional funding for special education services beginning in the 2026-27 school year.
Special Education Adjusted Allotment (SSA): Provides $1,000 for each special education evaluation conducted by a school district, regardless of student enrollment status.
College, Career, and Military Readiness (CCMR) Outcomes Bonus: Increases the bonus amount for special education graduates meeting CCMR outcomes.
Allotment for Basic Costs (ABC)
The bill created a new allotment to support essential operational expenses, including transportation, insurance, and utilities. Statewide, the ABC provides $106 per enrolled student, helping districts alleviate financial pressures and allowing for more flexibility in budgeting.
I heard school districts are receiving around $15,000 per student. Is that true?
Yes, that number reflects all funding a district receives per student, but it’s not all available for day-to-day operations. Roughly half of the $15,000 per student is earmarked for specific purposes, such as bond repayment, special education, or other state-mandated programs—ensuring districts meet important legal and student-focused requirements. The remaining funds are what districts use to directly support classrooms, teachers, and programs, giving local leaders the flexibility to make decisions that best serve their students.
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